Microsoft to Answer For Big Mistakes at Annual FAM

Dennis Faas's picture

Microsoft Corporation will face tough questions today at the annual Financial Analysts Meeting (FAM), where it's expected the software giant will have to answer for some troubling financial numbers. Topping the list of questions: a struggling Internet business, mobile-phone troubles, and where the company sees its future in a constantly-changing PC market.

Microsoft shares have dipped significantly this year, down about 15 per cent over the same period in 2009 and just recently emerging from a 52-week low. That's prompted questions amongst financial analysts about how the company is navigating new trends, including tablet PCs and smartphones.

Microsoft Bing Not Profitable Enough

Some critics question Microsoft's decision-making when it comes to several major projects over the last year. "They've spent billions of dollars chasing a whole bunch of rabbit trails," said Bill Smead, chief executive at Smead Capital Management. "Who would buy stock in a company like that?" (Source:

So, what counts as a rabbit trail? Perhaps it's Microsoft's Internet business. For years, Microsoft has been chasing search engine giant Google Inc., spending a whopping $696 million last quarter -- while earning just $565 million in revenue. While Bing's growth has climbed to 13 per cent of the search engine market in just a year, it remains well behind Google's 63 per cent share. (Source:

Tablet Plans Remain Vague

Meanwhile, other analysts focus their scorn on Microsoft's failure to develop a Windows-based alternative to Apple's popular iPad tablet. Although Microsoft Chief Financial Officer Peter Klein told analysts his company was working on the development of a new tablet, Citigroup's Walter Pritchard said Klein was "vague" on the issue, adding "I think he wasn't specific enough to put to bed the concerns that some people have."

Still Waiting on Windows Phone 7

Finally, many analysts are concerned about the upcoming Windows Phone 7, since Microsoft hasn't made clear plans for how it will showcase the mobile software in an exciting device. Microsoft recently killed its Kin smartphone, leaving some wondering how Windows Phone 7 will be effectively implemented, and beyond that, marketed so that it might compete with offerings from Google or Apple.

Just how important is this meeting for Microsoft? BetaNews' Joe Wilcox thinks it could be CEO Steve Ballmer's last chance to save his job. (Source:

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