Place your bets on research

No reason to sugarcoat the Microsoft quarterly financial report issued this afternoon: it reflected the bad news in the overall economy.  Revenue down, earnings down, profits down. 

What I did find most interesting was the silver lining as Business Week points out in its coverage. Like most of Wall Street apparently (MSFT stock rose in after-hours trading), Business Week was impressed with some of the positive steps taken by the company:

Maybe the most striking news is Microsoft’s crisp cost-cutting. Who knew this Midas of the computer industry knew how to scale back so well? In the quarter, administrative costs fell by more than $1 billion, from $2.3 billion to $913 million. And the company completed its first ever general layoff, of 5,000 people. The company did not cut into its R&D budget, however. Spending there rose from $2 billion to $2.2 billion.”

It’s that last point that I’m focusing on, as it demonstrates that the company is living up to CEO Ballmer’s pledge to increase our annual R&D spending – amid this deep recession – from $8 billion a year to over $9 billion.

At a time when most budgets are hurting, that’s quite an investment.  If you’d like to know what we’re getting for that, check out http://research.microsoft.com, or for the most up-to-date reports, use Twitter to follow @MSFTResearch – this week, the Twitter feed has focused on papers and demonstrations we’re presenting at the 18th International World Wide Web Conference (WWW2009).

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3 Responses

  1. Lewis, These are hard times for all and I feel for those in the tech industry who have been hurt in this recession. But I also share the optimism and am pleased to see Microsoft raising is R&D budget. Thanks much for pointing out this news, this is exactly the right time to do this.

    As your folks do that, please do what you can to underscore for them the major trends in the IT industry that will be shifting Microsoft’s future business model, like open source software, very high power processing architectures, and virtualization. All three of those hold great potential to impact Microsoft’s future revenue– either in a negative or a positive way– depending on what decisions are made today.

  2. i like your site but it is a bit to bullish for me. the economy is in trouble and i dont want to get caught long.

  3. I certainly understand your trepidation. However, in my opinion, the faults of follies of humans have led to the current troubles, and therefore could be overcome with better, more rational understanding of the long-term operation of the “invisible hand.” I’m not a stock-picker or recommender, but I personally believe that companies and countries which focus on investing in innovation will outperform. Thanks for reading! -lewis

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