Microsoft’s Miss Shouldn’t Surprise

Yesterday, Microsoft (MSFT) announcement it missed earnings projections by 11% came as a shock to the market, which immediately send the stock down almost 10%.

A shock. Really? We’re surprised.

Even if we completely ignore the entire credit crisis, the weak economy, the financial bailouts and the coolness of the Apple (AAPL) iPhone, lets face it, Microsoft had a bad year.

It wasn’t recession bad, it wasn’t depression bad, but it was definitely not a great year. And any surprise at that news, well… comes as a surprise.

Let’s touch on the failed merger talks with Yahoo! (YHOO). The on-again, off-again buyout talks were a boon to financial writers and PR officials, but not the MSFT bottom line. And at the end of the day, they still have nothing to show for all of it.

And let’s not forget the miserable failure of the Vista operating system and the resulting wretched ad campaigns. We won’t even get into the specific failings of Bill Gates dancing or Jerry Seinfeld as spokesperson. The PR damage to Vista was almost too severe to come back from. We applaud the fast tracking of Windows 7.

Let’s mention the seeming lack of solutions to compete with the Google (GOOG) advertising juggernaut. Google has been slowly usurping the power base of what has traditionally been Microsoft’s domain. And that shows no sign of stopping.

But perhaps the biggest reason the market punished MSFT so severely was that for the remainder of the fiscal year they would not issue earnings forecasts - because of “market volatility.” That has to hurt all of those analysts who rely on those figures.

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