Business Issues

What Microsoft's Earnings Report Means for Small Businesses

Microsoft unveiled its earnings for Q4 2013 on Friday, and the results left some investors uneasy.  What matters on Wall Street, however, isn’t the same as what matters on Main Street, so small and medium businesses need to analyze the news through a different lens.

Microsoft actually had a decent quarter to cap off a very successful fiscal 2013. Revenue for Q4 was up 10 percent over Q4 2012, and profit was almost $5 billion (USD) compared to a $492 million loss in the same quarter last year. Revenue was also up for the year, and Microsoft profit was nearly 30 percent higher than 2012.

Despite declining PC sales, adoption of Windows 8 is on pace with that of its predecessor. There has been some backlash over the dramatic redesign of Windows 8, and Microsoft’s attempt to convert the OS to a touch-based interface, but most of the major complaints are addressed with the Windows 8.1 update, which will be officially available later this year.

Another silver lining from the Microsoft earnings report is the fact that the Business Division and Server and Tools units both reported solid increases in both revenue and profit over the previous year. Office 365 is a cost-effective way for SMBs to acquire Microsoft Office, along with hosted Exchange and SharePoint, and it has quickly grown into a $1.5 billion source of revenue for Microsoft.

Many businesses are operating smoothly on older versions of Windows and Microsoft Office, but with support for Windows XP expiring next year, small and medium businesses should seriously consider moving to Windows 8, or at least Windows 7.  Newer software is also generally more secure, even though it may lack some of the ingrained capabilities and features of legacy tools.  Any major software or hardware upgrade demands a broader look at all of the software and peripherals used by your company, as well as accounting for a learning curve for administrators and users.

Investors may wish to cash out while the stock is high (as investors do), but Microsoft's future in the SMB environment remains bright. Bottom line: don't let the dip in Microsoft stock affect the IT strategy for your company.

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