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July 24, 2006

Spending on the agenda for Microsoft analysts meeting

Posted by David Hunter at 11:48 AM ET.

Allison Linn at the AP reports that the financial analysts want more detail on Microsoft’s spending plans at the financial analysts meeting scheduled for July 27:

When Microsoft Corp. gathers financial analysts next week for an annual meeting at its Redmond campus, the demand won’t be so much to “show me the money” as to “show me what you’re doing with the money.”

Microsoft executives offered some relief Thursday during the company’s fiscal fourth quarter earnings call, when they provided a breakdown of the general areas where they plan to allocate about $2.7 billion in increased spending. Still, at the meeting next week, analysts say they are expecting more details on where exactly the money is going – and what shareholders can expect to get in return.

Microsoft said it expects to spend about $500 million more in the current fiscal year on improving its own Internet-based software offerings. The budget includes money for improving its search and online advertising technology – the key ways it hopes to battle Google Inc. and Yahoo Inc.

Also during the fiscal year, Microsoft expects to spend about $450 million more on marketing, in part because of the launch of new versions of Windows and Office.

Not to mention Zune which will supposedly duplicate the Xbox 360 marketing expense.

Another $450 million will be spent on boosting its sales efforts.

Microsoft also said it will increase spending by $1 billion to either develop or improve products in areas where it sees potential to grow beyond its traditional Windows and Office roots. These include security and more sophisticated communications technology.

Not to mention Zune again, and frankly I suspect you have to in order to justify $1 billion, because “security and more sophisticated communications technology” don’t seem like real crowd pleasers.

The final $300 million will be for general spending increases and potential acquisition costs.

Although analysts were caught by surprise by the big spending spree, many say they are glad Microsoft is getting more aggressive about competing and expanding its business further beyond Office and Windows, which face an ever-more-saturated market.

Obviously they’re still of the “Microsoft is a growth stock” persuasion.



Filed under Advertising, Argo, Coopetition, Financial, General Business, Google, Investor Relations, Marketing, Microsoft, Yahoo, Zune

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2 Responses to “Spending on the agenda for Microsoft analysts meeting”

  1. Microsoft Financial Analyst Meeting 2006 will be Webcast -- Microsoft News Tracker Says:

    [...] If you’ve got some time on your hands tomorrow, you can watch the Microsoft financial analyst meeting from the comfort of wherever while wearing your whatevers. It runs from 8:00 A.M. – 5:45 P.M. Pacific Time and the agenda and Webcast link are here. If that exceeds your patience, “presentation materials, transcripts, and on-demand webcasts” will be posted at the same location throughout the day. On Monday we mentioned some of what is likely to be roiling the analysts. Filed under General Business, Financial, Microsoft   [Permalink] [...]

  2. RadioPowerUSA.com - Blog Archive » Can Google aggressively fork over $2.7 billion in new spending like Microsoft, whenever it wants? Says:

    [...] I’m going to change the advertising world for Google, or Microsoft, or Yahoo. I want to speak with Sergey Brin and Larry Page — they’re my first choice — because they’ve created Publications Ads, and my detailed algorithmic studies show that the reason Publication Ads is not working is …. Well, I promised myself, I would only spill the beans to Sergey Brin and Larry Page. So just tell those dudes to call me, ah’ite. Because, let’s face it, while Microsoft can afford to spend $2.7 billion to make their dreams come true, Google needs me and my unique vision to help them change the focus of Publication Ads so it can become Google’s cash cow, and the vehicle that will brand Google across the planet in a special way that MSN will envy forever. Contact me. [...]

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