Sunday, August 09, 2009

PC company economics, July 2009

A few weeks ago the announcements of quarterly (and some annual) quants came out for public companies, including the major software and PC companies.

This report cycle was significant because it was the first year in which Microsoft reported a loss. And this loss was significant at $1 billion. From the Financial Times:

The world’s biggest software company said revenues had declined 17 per cent amid falling global demand for new PCs and servers. The news follows a spate of more positive earnings news from Apple, Intel and IBM.

Microsoft also sounded a far more cautious note about the prospects for a recovery in the second half of 2009.

“It’s going to be difficult for the rest of the year,” said Chris Liddell, chief financial officer. “We’re really still not sure we’re out of the woods.”

While the software company had been expected to suffer more than other leading tech companies, given its heavier exposure to cyclically volatile PC and server sales, the extent of the decline was unexpected and its shares fell by nearly 8 per cent in after-market trading and were off by 10 per cent in early trading on Friday.

The setback in the fourth quarter of Microsoft’s fiscal year caps the worst year in its 23-year history as a public company, and the first in which it has seen a revenue decline.

Broader trends in the technology markets have also hurt the company. Netbooks, the small, low-cost laptops that have been the one bright spot this year, now account for 11 per cent of all PC sales, according to Microsoft.

However, it receives much less for the version of the Windows operating system shipped with these machines.

In spite of the latest signs of weakness, Microsoft’s shares are still up nearly 60 per cent since their low point in April on hopes that new product launches, including the Windows 7 operating system, will revive its fortunes next year.

Mr Liddell said that Microsoft was not anticipating any further big declines from current levels of spending by its customers, and sees “the potential for improvement” in 2010.

A 29 per cent plunge in revenues from Microsoft’s core Windows PC division, to $3.11bn, aggravated the decline in the latest quarter. Microsoft was also affected by an upgrade guarantee that allows PC buyers to switch to Windows 7 when it goes on sale in October.

Heavy cost-cutting made up for some of the shortfall, with Microsoft slicing 10 per cent from its operating expenses compared with a year before. But net income fell 29 per cent to $3.045bn, or 34 cents a share.

There are some odd factors in here.

  1. Intel - which makes processors for nearly all the PC manufacturers - did well.
  2. IBM did well, though many - and perhaps most - of the servers it sells run linux.
  3. Apple, which is a direct competitor of Microsoft, did very well.
In fact Apple had their best non-holiday quarter ever, making $1.3 billion on profit.

So Microsoft’s financial and market experts say that the whole industry is down due to the recession, but in fact it is Microsoft’s business that is down, and forecast to be negative for some period in the future.

This is starting to look like those years in the auto industry when the American car makers said things were bad, but the Japanese car makers did well continuously.

In both cases, the problem is not consumer or corporate sales as much as it is management ignorance. Microsoft has a problem, but management wants to lay the blame somewhere else rather than actually examine the problem analytically.

Sunday, August 02, 2009

Twilight Dance Series 2009

When I finally restarted swim workout in earnest (every Tuesday and Thursday 7:30-8:30) it meant I had to give up some evenings. I’ve been well disciplined in going to workout every time for about a month now - and that means that I’ve missed the entire Twilight Dance Series on the Santa Monica Pier thusfar this summer.

That means that I’ve missed Joan Baez, Sgt. Garcia, the Squirrel Nut Zippers and Thomas Mapfumo. (I’ve heard music of three of these four and like what I’ve heard. The description of Sgt. Garcia made them sound good too.)

But this coming Thursday I’ll be skipping swim practice to go see Dave Alvin and his group The Guilty Women playing live.

And three weeks from that event I’ll be skipping swim practice again to see Lila Downs.

Mmm, these will be fun. :-)

The Spectacle of Religions

I was walking back from the beach (morning surfcheck) and nearly got run over by the annual Festival of Chariots, or as we local residents call it - the Krishna parade.

Well okay, I wasn’t really “nearly run over” because the people and the carriages move at a slow walking pace, but the parade was about to start at Pico and Main St., less than 100 yards from where I crossed Main. So I decided to wait a few minutes and watch the spectacle as it passed by.

This was the third time I’ve seen the parade, and at least the fifth time that I was aware of it as it went by. (I live close enough to Main St. that it’s easy to hear the amplified chanting and music.) It’s interesting to see the collection of people who are part of this religious celebration. There were several hundred people walking, dancing and chanting as they preceded and accompanied alongside the three “chariots” ((more like giant carriages). There are a few people riding along on the carriages: some are the transport workers who 1) pull on the traces to provide propulsion, 2) man the tiller or steering wheel, 3) operate the brakes. These workers ride on the bottom deck. There are also a number of people riding on the second deck with the avatar of the god that particular carriage is carrying.These appear to be the priests and priestesses who have literally achieved a higher plane and are allowed to approach the symbol of the god(dess).

The whole spectacle is quite entertaining due to its colorful clothing and decoration, the aforementioned walking, dancing and chanting, and especially the happiness and apparent peacefulness of the participants. A number of them, let’s call them the outwalkers, hand out little pamphlets and lollipops to bystanders. (I graciously declined taking any of these offered “gifts”.)

Unfortunately I hadn’t carried my camera with me on this surfcheck (small waves, but good for beginners) so I can’t show any original photos. (I remember taking pictures in the last year or two, but cannot find those photos.) However here are some other’s photos:

ChezLuna’s picture of the Santa Monica Festival’s three chariots
Flickr photos of all FoVs worldwide
Picasa photos of the Santa Monica FoV

Here is Wikipedia on the “International Society for Krishna Consciousness” or as they call themself, ISKCON.
Here is the city of Santa Monica’s listing of the Festival of Chariots, as well as other events on 2 August 2009.

Sadly, the main reason I really missed having my camera was the pathetic trailer following the whole parade. This guy, in his mid-50s and dressed like a Bubba with the ball cap, salt-and-pepper beard, and t-shirt stretched over a distended beer belly, was carrying a large banner for his own god. The beer belly supported a harness with a leather pocket that help up this ten foot tall banner that proclaimed “there’s only one god and that is JHC”, and a similar slogan on the flip side. This guy followed carefully about 20 feet behind the rest of the parade. When it slowed or stopped, he stopped. When he was stopped he would occasionally rotate his message so anybody watching could see the flip side’s slogan. When the happy paraders started up again, this somber sad man would also start again. He never took his eyes off what he was following, never looked around to see if anybody was watching him or his message. I don’t know if this was due to drilled-in parade ground discipline or because he didn’t want to let the heathen devils out of his sight. (Lest they sneak up on him and steal his soul, perhaps?)