U.S. stocks fell on Friday after Microsoft Corp. tempered revenue expectations for the Vista computer operating system.
“Microsoft can’t catch a break. We’re at 20 million shares in volume already – that’s not your grandmother trading,” said Cummins Catherwood, managing director at Rutherford, Brown & Catherwood in Philadelphia. “Those hedge funds can’t deal with disappointment. They can’t afford to wait for the impact to dissipate.”
I can’t help but smile because as Mr. Ballmer cautioned analysts on overly optimistic Vista forecasts, he hit some of my favorite high points:
The net in Ballmer’s words:
And the things people forget is a new Windows release is primarily a chance to sustain the revenue we have.
Given some of the daftly unrealistic analyst reports on Vista that I have seen in the press, it was probably time for a warning like this, although I’m sure Mr. Ballmer would certainly have preferred to deliver a happier message. Still, it’s better to temper unrealistic assessments now than to suffer massive disillusionment and share price abuse later.
Also of interest in Mr. Ballmer’s remarks was the indication that expense growth would vary little if at all:
Another area analysts were interested in hearing more about at the event was Microsoft’s plans for operating expenses in 2008. Some analysts had felt the company did not adequately prepare them before it announced a $2.7 billion increase in operating expenses for fiscal 2007 in April.
In this area, too, Ballmer seemed to want to temper expectations. He told analysts that they should expect only “a small drop from the $2.7 billion increase” for 2008, adding later that the company “may come back to you some time during the year and tell you that we’ll increase it.”