Microsoft releases earnings. Sky does not fall.

Posted by Mike Snyder on January 24, 2009  |  Comments (0)

Microsoft released their quarterly earnings on Thursday, and the news wasn’t great. Sales were up just 1.6% year over year, but profits slid 11.3%. Microsoft also announced that for the first time in their entire history, they will layoff some employees. They cut 1,400 jobs on Thursday and will cut another 3,600 jobs over the next 18 months. They also cut travel and entertainment budgets by 20%. I talked with a few people from Microsoft on Friday, and I didn’t hear that there were any layoffs in Dynamics.

Believe it or not despite the bad news, there was some good news in the earnings call:

• Microsoft announced they are planning to HIRE an additional 2,000 to 3,000 employees. Therefore the actual net effect of the 5,000 layoffs and the new hires means headcount will be down 2,000 to 3,000 employees. These numbers do not include contractors who might not be renewed for additional engagements.

• Bill Koefoed, General Manager of Microsoft Investor Relations said "Microsoft business division revenue was up 1% to $4.9 billion. Business revenue grew 7%, driven by continued strength of the annuity business across Office, SharePoint and Client Access licenses suites, and benefited from strong deferred revenue recognition. ...From a product perspective, SharePoint, Office Communication Server and CRM, all grew at double-digit rates."

It is great to see that Microsoft CRM received a positive callout!

Later on Thursday, we received a nice email from Kirill Tatarinov. It was a pretty simple email, but I thought it was a nice touch just reinforcing the “keep your head up” message.

From: Kirill Tatarinov [mailto:Kirill.Tatarinov@microsoft.com]
Sent: Thursday, January 22, 2009 2:31 PM
Subject: Microsoft Dynamics

Presidents Club Partners,

By now many of you are aware of actions Microsoft has taken in response to the difficult economic climate we currently face.  The press release can be found here.

I wanted to use this opportunity to reassure you that Microsoft Dynamics remains an important business opportunity for the company.  Despite challenging economic times our shared investment in Microsoft Dynamics will allow us to outpace the competition by rapidly innovating and advancing all of our core products forward. 

We are committed to our strategy and we continue to execute.  From the ERP side, we remain focused on enabling simplicity for midsized organizations.  In CRM, we continue to target midsized and enterprise organizations, emphasizing the Power of Choice.  Becoming truly industry focused, fully embracing Software + Services, and building on the unique strengths of the Microsoft platform remain key tenets of the overall Microsoft Dynamics strategy. 

I also want to use this opportunity to reinforce that we remain highly committed to YOUR success as a critical part of this business.  Together we can use the opportunity in front of us to gain share through customers that are looking for solutions from a vendor that will be in the market for the foreseeable future.  We will continue to support you in delivering outstanding value to Microsoft Dynamics customers.  Over the past months, we introduced initiatives like 0% financing to help our customers gain immediate access to capital and invest in their business in uncertain economic times.  Over the following months we will be unveiling additional actions to support our customers.

I look forward to seeing many of you in person at Convergence New Orleans.  We will weather this storm together.  We will endure.  We will prevail. 

Thanks,

-- Kirill Tatarinov
Corporate Vice President
Microsoft Business Solutions