Tomahawk, WI 03/27/2014 (Basicsmedia) – With Satya Nadella expected to announce Office for iPad, Microsoft Corporation (NASDAQ:MSFT) is looking to add a couple more billions to its revenue. But the markets are still not convinced that this is enough to turn things around for Microsoft.

Highly Profitable Company

It’s worth remembering that Microsoft Corporation (NASDAQ:MSFT) has always been highly profitable and it continues to remain so. It has a near-monopoly in office productivity software with its Office suite. Its Windows OS for PCs earns billions in revenue and profits.

Its database software, server operating systems, Azure cloud offerings bring in more billions.

Xbox Analysis

Even though Microsoft has announced a temporary price cut of $50 on its Xbox One console and game bundle, Microsoft still makes billions selling the Xbox One and its predecessor Xbox 360. Q2 revenue for the Devices and Consumer Hardware Division, which is the home of Xbox, was $4.7 billion — 22% of Microsoft’s Q2 revenue of $21.46 billion. What explains the price cut? It’s worth noting that Microsoft has reported sales figures of 3.9 billion units for Xbox One compared to 6 billion units for the Playstation 4 from Sony Corporation (ADR) (NYSE:SNE).


The major failure of Microsoft Corporation (NASDAQ:MSFT) has been its inability to foresee how quickly consumers will shift their preferences towards smartphones and tablets. Apple Inc. (NASDAQ:AAPL) with its legendary founder and creative genius Steve Jobs has been able to change the nature of the game in the smartphone business with its iPhone and start new segments such as tablets with its iPad. Microsoft’s smartphone products with its Windows Mobile OS have been a notable failure as also its Surface range of tablets.

It remains to be seen whether the acquisition of Nokia Corporation (ADR) (NYSE:NOK)’s handset business is going to benefit Microsoft or not.

Nokia has come up with Android-powered devices. This will be detrimental to Microsoft’s mobile OS but the product might be a hit in the developing countries where Nokia has a very good product reputation.

Finally, even the acquisition of Nokia’s devices and services business by Microsoft is not completely sealed because of pending regulatory approvals from multiple national regulatory bodies. Apart from these regulatory affairs, Nokia Corporation (ADR) (NYSE:NOK) is also involved in a long-running tax tussle with the Government of India with legal battles winding their way through the court system.


Despite all these niggling issues, Microsoft Corporation (NASDAQ:MSFT) remains a highly profitable, cash-rich company and is a strong ‘buy’ for long-term investors.

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