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I agree that Vista was a flop and IE has always been one but I have genuine faith in Windows 7! Are they what they once were? No, the market is more diverse and there's more competition, so that's a given.
The same can be said (and is indeed being said) about other companies though, so the predicament, if it can be called that, is hardly unique to Microsoft.
The world as a whole is bleeding cash and doubly so for US companies and Japanese companies so posting a loss is more indicative of the world's economic status rather than the company itself.