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| UPDATED: 2006-05-01 |
 Wave Of Microsoft Trades Hammers Nasdaq 
By: David Utter 2006-05-01 Trading volume of Microsoft surged over 591 million the day after the company announced its third quarter results, and investors pushed the stock price to a 52-week low.  Microsoft (MSFT) ended Friday's trading at 24.15, up from an intraday low of 24.00, a low point for the company in the last 52 weeks of trading. Extraordinary trading volume moved at substantially more than Microsoft's average volume.
The drop of 3.10 per share on Friday also moved Microsoft from second to third among the largest companies in the world. General Electric still ranks first, but Microsoft dropped behind Russian natural gas producer Gazprom. New product revenue increases led to an overall revenue increase for Microsoft of 13 percent, totaling $10.90 billion. Net income and diluted earnings per share for the third quarter were $2.98 billion and $0.29 per share, which included $0.03 of legal charges. But the dramatic rise in operating expenses, from $6.2 billion to $7 billion compared to the same quarter last year, apparently has caused some concern in the company's investors. The cost of revenue itself moved to $2.028 billion from $1.363 billion for the same period. Another cause for concern â€" the perception that Microsoft has taken its eye off the two products that made it the world's most powerful technology company. The Windows operating system and the Office productivity suite simply dominate the corporate computing landscape around the globe. Seeing Microsoft push consumer releases of the new Windows Vista operating system and Office 2007 into early 2007 did no favors for OEM companies and processor manufacturers who would have benefited from holiday demand for PCs with Vista. Instead, Microsoft seems more interested in Windows Live and MSN adCenter, products that more directly target rivals like Google (GOOG) and Yahoo (YHOO). Microsoft trails both companies in terms of search engine share, paid search advertising, and web services. Microsoft has made several moves to extend its desktop dominance to the online world. The company released Windows Live Local with an impressive array of "bird's eye" images for a number of major cities across the US. It also just launched the Shopping Live search engine in beta. Gaming has been another place occupying Microsoft's thoughts. Shipments of the Xbox 360 game console hit 1.75 million units during the quarter. The Home & Entertainment had a revenue increase of 85 percent to $1.056 billion for the year-over-year quarter, but the operating loss reached $388 million, more than double the same period last year. The Xbox 360 has suffered from three things: shortages of the console in numerous markets; new game prices of $60 instead of $50, a figure that has been a ceiling for virtually all new game titles before the 360 launched; and the lack of a must-have game like "Halo," the success of which Microsoft could not match with "Halo 2" and reportedly will not approach with "Halo 3." In observing Microsoft, one must consider the company's immense presence on PCs worldwide, and its multi-billion cash reserves. While investors may entirely approve of where Microsoft is going today, the company has considerable leeway on getting there. --- Tag: Microsoft Add to | DiggThis | Yahoo! My Web | PreFound.com Bookmark IFN - 
View All Articles by David Utter About the Author: David Utter is a staff writer for InternetFinancialNews and WebProNews covering technology and business. |
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