This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
See Cramer's multi-million dollar portfolio for FREE and get his new book Get Rich Carefully! Learn More

Where's Microsoft Going?

NEW YORK (TheStreet) -- There's an uproar on the Street about Microsoft's (MSFT) "disappointing" fourth-quarter earnings results. But disappointing for whom?

I've heard the words "surprise" and "shocker" used to describe the company's miss on earnings per share and revenue. But was it really such a bombshell?

The last time we talked about the state of Microsoft, and in particular the company's management, I said the following:

Say what you want about the word "conviction" in the world of investing, but patience has its limits. Cheering on a company is all well and good. But if it's not matched by execution, there's a point when it's best to cut your losses and move on. With shares of Microsoft having already gained 25% on the year, now's the perfect time to move on to the next good idea. It's all downhill from here.

I said this while the stock was making new 52-week highs in what seemed like every other week. I was not impressed -- not as long as Microsoft was still being led by the current management team, which has shown an inability to find the hidden value this company still has. How it still deserves the benefit of the doubt remains a mystery.

While Microsoft's fourth-quarter earnings results do show the company still has some say in how corporate IT functions, there were still plenty of missed opportunities as the company tries to compete with Apple (AAPL) and Google (GOOG) in mobile devices. With management's poor track record of execution, I don't believe the recently announced "reorganization plan" will be enough to reward shareholders for their patience.

Before you disagree, let's dissect this recent performance.

I think we can agree that not much was expected from Microsoft going into this quarter. We know that a significant portion of the company's revenue and profits come from a declining PC industry. This means that two of Microsoft's dominant franchises -- namely Windows and Office -- are "endangered."

What this also means is the Street had lowered expectations ahead of the report, not just for Windows and Office, which are Microsoft's two main revenue generators. But expectations had come down for several other segments like Server & Tools, Online Services, Entertainment & Devices, etc.

Unfortunately, Microsoft missed its targets on every segment. This is not something investors see every day within the tech industry. Microsoft supporters insist on arguing the details of "by how much did the company miss," suggesting that relative to expectations, the results weren't that bad. But I would caution about this chronic choosing of the "glass-half-full" view. It's blurred.

Stock quotes in this article: MSFT, GOOG, AAPL, ORCL, CRM 

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
DOW 16,408.54 -16.31 -0.10%
S&P 500 1,864.85 +2.54 0.14%
NASDAQ 4,095.5160 +9.2910 0.23%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto
Advertising Partners

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs