Microsoft posts mixed results
25-04-2008
by Emmet Ryan

Microsoft gave no indication of plans to raise its bid for Yahoo despite posting a mixed bag in its latest set of results.

In some respect the results were positive as the Redmond-based IT giant beat analysts' expectations. Microsoft posted earnings per share of USD0.47, ahead of the average estimate of USD0.44. Sales though were relatively flat at USD14.45 billion, only marginally up from the USD14.4 billion a year earlier. The firm saw operating income drop substantially to USD4.41 billion, down from USD6.59 billion for the same period last year.

Despite the poor showing on the profits and revenue front, Microsoft's management was confident the figures signalled an overall trend of growth in the business. "Our broad span across geographies, product categories and customer segments is a tremendous asset and supports our outlook for double-digit revenue, operating income and earnings per share growth for this fiscal year and also for fiscal year 2009," said Chris Liddell, chief financial officer at Microsoft.

Liddell may be smiling outwardly but inside the Microsoft hierarchy must surely want to add another weapon to its arsenal. With Yahoo so far ignoring the Redmond-based firm's advances it may be time for Microsoft to up its offer or elect to move on and find a new toy. If the comments from the IT giant's management are to be believed then the latter is an option. "Unless we make progress with Yahoo towards an agreement by this weekend, we will reconsider our alternatives," Liddell told a conference call with journalists.

In reality though, Microsoft is still quite keen to snap up the search firm. With the IT giant looking to raise its share of the online advertising market, Microsoft could certainly do with a firm like Yahoo.

The search engine though is a long way from bowing down to Microsoft just yet. Yahoo posted improved results on Wednesday and is in no mood to accept the current offer of USD31 per share that is on the table. With Saturday being the deadline for acceptance of the offer it appears the deal is about to reach a crossroads. Either Yahoo will surprise many by accepting the deal, or the more likely occurrence of Microsoft launching a hostile takeover will begin to take shape. The tension is about to go up a notch.