Later today, Microsoft may give the rest of the world a peek at its latest intentions about Yahoo. That’s when the software giant announces quarterly results and CFO Chris Liddell faces analysts. There are hints that not everyone in Redmond is wahooing about Yahoo. The Wall Street Journal reported today that many rank-and-file Microsoft employees are less than excited about a possible acquisition. Some are naturally worried about their jobs, the report says, but others are concerned the company will face a major distraction in merging the two entities at a time when Microsoft faces huge challenges. CEO Steve Ballmer suggested in a speech yesterday in Milan that his company didn’t need Yahoo and could go it alone, if need be. We’ll soon find out if he’s responding to employee unrest or just putting the squeeze on Yahoo. The deadline he set three weeks ago for Yahoo to come to terms expires Saturday.
If you want a measure of the mountains Microsoft must climb, look at the company’s announcement earlier this week of Live Mesh, a service that promises to synchronize all the data on all your devices. The response among experts and pundits was rather ho-hum although the service could make Microsoft a player in the world of “cloud computing,” the area that archrival Google has been exploiting. Microsoft didn’t help by being fairly tight-lipped about long-term plans for Live Mesh, but it is also faces the fact that, as the legacy company, it’s hard to get people excited about anything Microsoft does these days.
Contrast that to Apple, which gets analysts and fans jumping up and down every time Steve Jobs scratches himself. The company announced strong results yesterday, with earnings up 36 percent on strong Mac sales. Those results are remarkable in the face of a general consumer spending slowdown. The new super-slim Mac portables helped push computer sales up 51 percent over the same quarter last year. The company said it sold 1.7 million iPhones in the quarter, about what analysts expected but it is losing a chunk of revenue because of all the iPhones that are being hacked to work on the networks of carriers that don’t have revenue-sharing deals with Apple.
The only blip in Apple’s rosy report was a flattening out of iPod sales with 10.6 million units sold, a gain of just 1 percent over the same period last year. But even there, revenue was up 8 percent because people are buying more expensive devices. At the same time, Apple cautioned that it would be affected by the slowdown in the next quarter and might not deliver such stellar results again. Despite the warning, Apple’s share price closed up nearly 2 percent at $162.89. Some guys can do no wrong.
That gets us back to the Microsoft-Yahoo drama. Yahoo reported decent performance earlier this week with a first-quarter revenue increase of 9 percent over the same period in 2007. There was a one-time spike of $401 million from the sale of its shares in Chinese site Alibaba. The results pointed to some weaknesses in several ad sectors like travel, finance and retail and Yahoo didn’t alter its original revenue projections for 2008. That left analysts unmoved and did little to support CEO Jerry Yang’s argument that Microsoft’s $31-a-share offer undervalued the company. For some companies, you can’t win for winning.