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Forums - Microsoft Discussion - Microsoft FY2016-Q2. Revenue $23.8 bn, Op Income $6.0 bn, Net profit $5.0 bn. Beating expectations AGAIN.

Zappykins said:
DirtyP2002 said:

Are you German?

German people like to look for negative news. You see us chilling at the beach, we will probably complain about the water temperature. It is in our DNA. We are always on time, we like to do things very accurate and we complain.

English ones:

"Rising Cloud Sales at Microsoft, Amazon Reflect Bigger Shift in Enterprise Market" Wall-Street Journal

"MarketWatch First Take: Microsoft gaining on Amazon in cloud" Market Watch

"Microsoft shares rise as it tops forecasts" Financial Times

German ones, obviously translated:

"weak PC market affects Microsoft negatively" German press agency

"Financial report: Microsoft Windows keeps on declining" golem.de

"Cloud business saves Microsoft from collapse" Handelszeitung

Doom! Doom! Yes, I say DOOM!!

Although, if they keep making all this money it's going to be hard to burn through that $100 billion cash they have sitting around.

Good job Microsoft.

Haven't Nintendo patented doom claims? You'll be sued



duduspace11 "Well, since we are estimating costs, Pokemon Red/Blue did cost Nintendo about $50m to make back in 1996"

http://gamrconnect.vgchartz.com/post.php?id=8808363

Mr Puggsly: "Hehe, I said good profit. You said big profit. Frankly, not losing money is what I meant by good. Don't get hung up on semantics"

http://gamrconnect.vgchartz.com/post.php?id=9008994

Azzanation: "PS5 wouldn't sold out at launch without scalpers."

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kowenicki said:

 

reserved

I'm not keen on all this financial stuff, but how does MS have roughly the same revenue as Sony but over five times the profit? Do they just have divisions that lose way more money?





So, how is the gaming division doing?



LudicrousSpeed said:
kowenicki said:

 

reserved

I'm not keen on all this financial stuff, but how does MS have roughly the same revenue as Sony but over five times the profit? Do they just have divisions that lose way more money?



 

Microsoft is in businesses with way higher margin (software), while Sony is primarily in businesses with lower margins (hardware). Apple is basically the only hardware/electronics company that manages to maintain a very high operating margin.

It also obviously doesn't help that a lot of Sony's divisions have performed weakly, but in general, software has higher operating margins than hardware.



Yeah that was my other reasoning. Kind of like how when I ran electronics at a Walmart I knew HDMI cables had insane high profit margins. But DVD's do not. So if I sold $100 worth of DVD's and $75 worth of HDMI cables, there would still be much much more profit with the HDMI cables.



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LudicrousSpeed said:
kowenicki said:

 

reserved

I'm not keen on all this financial stuff, but how does MS have roughly the same revenue as Sony but over five times the profit? Do they just have divisions that lose way more money?



Its because the revenue that Microsoft generates (mostly software and services) has very high gross margins.  Gross margin is revenue - cost divided by revenue and is given by a percentage.  On average microsoft keeps 60 cents (60%) out of every dollar of revenue they generate as profit, mostly because the cost of product mix they sell.

Sony's gross margin is only 6 cents (6%) because their products have very high input costs and make little profit or are sold at a loss to increase marketshare.  They hope to make money on higher margin items such as services, software, music and movies (when those businesses are doing well).





LudicrousSpeed said:
Yeah that was my other reasoning. Kind of like how when I ran electronics at a Walmart I knew HDMI cables had insane high profit margins. But DVD's do not. So if I sold $100 worth of DVD's and $75 worth of HDMI cables, there would still be much much more profit with the HDMI cables.

Overpriced cables bought by stupid people are a very bad comparison.

Try the profit margin of the dvd-player compared with the profit margin of the DVDs.





Teeqoz said:
LudicrousSpeed said:

I'm not keen on all this financial stuff, but how does MS have roughly the same revenue as Sony but over five times the profit? Do they just have divisions that lose way more money?



 

Microsoft is in businesses with way higher margin (software), while Sony is primarily in businesses with lower margins (hardware). Apple is basically the only hardware/electronics company that manages to maintain a very high operating margin.

It also obviously doesn't help that a lot of Sony's divisions have performed weakly, but in general, software has higher operating margins than hardware.

That's how one can easily see how overpriced Apple products are; look at their insane profit margins on hardware and it becomes clear that customers are paying a whole lot for brand and not really for components.

Anyway, MS has always been a software company first and foremost, and that yields significantly more profits on average, for obvious reasons. I still remember fondly when I had to explain to a member on this very site that the development cost of games is not tied to how many copies you printed (yes, he actually tried to argue that).





Mummelmann said:
Teeqoz said:
LudicrousSpeed said:

I'm not keen on all this financial stuff, but how does MS have roughly the same revenue as Sony but over five times the profit? Do they just have divisions that lose way more money?

Microsoft is in businesses with way higher margin (software), while Sony is primarily in businesses with lower margins (hardware). Apple is basically the only hardware/electronics company that manages to maintain a very high operating margin.

It also obviously doesn't help that a lot of Sony's divisions have performed weakly, but in general, software has higher operating margins than hardware.

That's how one can easily see how overpriced Apple products are; look at their insane profit margins on hardware and it becomes clear that customers are paying a whole lot for brand and not really for components.

Anyway, MS has always been a software company first and foremost, and that yields significantly more profits on average, for obvious reasons. I still remember fondly when I had to explain to a member on this very site that the development cost of games is not tied to how many copies you printed (yes, he actually tried to argue that).

Well, the margin on SW is ridiculous as well, but that is because they have very small cost for production.

On the discussion of dev cost. They could at most imply that when you expect a certain bracket of sales you calculate the cost to dev. And the cost to burn, print, package and distribute but they are very small.



duduspace11 "Well, since we are estimating costs, Pokemon Red/Blue did cost Nintendo about $50m to make back in 1996"

http://gamrconnect.vgchartz.com/post.php?id=8808363

Mr Puggsly: "Hehe, I said good profit. You said big profit. Frankly, not losing money is what I meant by good. Don't get hung up on semantics"

http://gamrconnect.vgchartz.com/post.php?id=9008994

Azzanation: "PS5 wouldn't sold out at launch without scalpers."

DonFerrari said:
Mummelmann said:
Teeqoz said:
LudicrousSpeed said:

I'm not keen on all this financial stuff, but how does MS have roughly the same revenue as Sony but over five times the profit? Do they just have divisions that lose way more money?

Microsoft is in businesses with way higher margin (software), while Sony is primarily in businesses with lower margins (hardware). Apple is basically the only hardware/electronics company that manages to maintain a very high operating margin.

It also obviously doesn't help that a lot of Sony's divisions have performed weakly, but in general, software has higher operating margins than hardware.

That's how one can easily see how overpriced Apple products are; look at their insane profit margins on hardware and it becomes clear that customers are paying a whole lot for brand and not really for components.

Anyway, MS has always been a software company first and foremost, and that yields significantly more profits on average, for obvious reasons. I still remember fondly when I had to explain to a member on this very site that the development cost of games is not tied to how many copies you printed (yes, he actually tried to argue that).

Well, the margin on SW is ridiculous as well, but that is because they have very small cost for production.

On the discussion of dev cost. They could at most imply that when you expect a certain bracket of sales you calculate the cost to dev. And the cost to burn, print, package and distribute but they are very small.

The biggest costs are the Retailer's margin, is really a lot, is like paying the Tax for Sony, or Microsoft, and pay another Tax, for the Retailer, even more expensive than what they gave to Sony, or Microsoft.