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Forums - Microsoft - MS Q1 2011 Earnings Release - Official Thread

Shorty11857 on 27 October 2010
Seece said:
whatever said:
Seece said:
whatever said:

All I said is it will be interesting to see the impact of Kinect on profitability.  Since I didn't make any claims, I'm not sure what you are referring to.

What do you mean by development costs? Costs of the HW or conception to release?

The costs of producing the hardware, the cost of testing the hardware, the cost of fixing bugs, etc.  Marketing costs will also have an impact on this quarter, but to say those will be the only costs is not realistic.

Well, it's hard to tell if the HW produced in this Q will be taking into consideration at all. It might and most probably will be moved to the following Q when the HW is actually sold. Also it's not really a secret or surprise they're selling for a profit. Kinect has been in dev for a long time, "fixing bugs, testing hardware" and the division has been profitable, so I'm not sure why testing and bug fixing will be a strain this time around?

Marketing costs like I said earlier, could be spread out over the course of the year, given that $500 mill marketing is a year thing. I can't see them paying for marketing due to start next September tbh. Hey I could be wrong.


Production costs will be moved to the following Q because even if they've made 2 million Kinects they can't show them (as a cost) in this Q because they haven't been sold or (most likely) written down

Advertising will be the same, if they pay for an advertising campaign for November it won't be included in this Qs figures (as a cost)

What a company gets in and out in cash is completely different from profit; so most likely they'll show a profit this Q, there's no real reason they shouldn't



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Shorty11857 on 28 October 2010
kowenicki said:
whatever said:
kowenicki said:
whatever said:

It will be interesting to see the impact of Kinect development costs and if that puts them back in the red (along with Windows Phone 7).



So you think Kinect development cost all happened during last quarter?    That must be the quickest development of a product ever!  3 months from conception to release. 

Kinect development costs will have been mostly accounted for previously.... from here on its marketing costs.

And you base this on what, besides pulling it out of your A@$.


I base it on common sense and having a clue about how these things work......

As far as Kinect is concerned the R&D was done and finished with a while back.  The last quarter will be mostly manufacturing/distribution costs, the next quarter will be heavy on marketing costs.

When you spend a dollar on the R&D, manufacturing or marketing of a product it goes in the accounts that day, you dont hold that dollar transaction item over until a product is near release or is released.

Try not to be so rude and ignorant in future....

 

Manufacturing doesn't go into accounts as a cost until the product is sold or written down

Costs of Producing Kinect minus the value of the closing stock of Kinect at cost = 0 or it should; so manufacturing Kinect won't have any weight on these figures



Hapimeses on 28 October 2010

I'm expecting about 3.5-4 million 360s shipped, but I'm rarely right about these things. I over-estimated the Nintendo numbers, after all (but not by that much this time).



Hapimeses.com

 

haxxiy on 28 October 2010
kowenicki said:

MS earnings statement due 2pm PT today?

So thats 9pm GMT I think???


It'll be four hours and some from now. So yes, 9pm GMT.



 

 

 

 

 

ethomaz on 28 October 2010

I started reading the @kowenicki's post and "What a hell..." when I saw the 2.1m for Q1 2010. Then I realized that Microsoft's fiscal year is always the next.... so waiting Q1 2011.

Now I was relaxed because is impossible just 2.1m in quarter with Slim release.



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Shorty11857 on 28 October 2010
kowenicki said:
Shorty11857 said:
kowenicki said:
whatever said:
kowenicki said:
whatever said:

It will be interesting to see the impact of Kinect development costs and if that puts them back in the red (along with Windows Phone 7).



So you think Kinect development cost all happened during last quarter?    That must be the quickest development of a product ever!  3 months from conception to release. 

Kinect development costs will have been mostly accounted for previously.... from here on its marketing costs.

And you base this on what, besides pulling it out of your A@$.


I base it on common sense and having a clue about how these things work......

As far as Kinect is concerned the R&D was done and finished with a while back.  The last quarter will be mostly manufacturing/distribution costs, the next quarter will be heavy on marketing costs.

When you spend a dollar on the R&D, manufacturing or marketing of a product it goes in the accounts that day, you dont hold that dollar transaction item over until a product is near release or is released.

Try not to be so rude and ignorant in future....

 

Manufacturing doesn't go into accounts as a cost until the product is sold or written down

Costs of Producing Kinect minus the value of the closing stock of Kinect at cost = 0 or it should; so manufacturing Kinect won't have any weight on these figures


Not so

There are two parts to accounts...  P&L and Balance Sheet

I can assure you the cost of manufacturing an item appears in the accounts before it is sold or written down/off.

 

 


that's why I said costs, the stock will go to the Balance Sheet but it won't affect profit at all and even including the balance sheet the net effect is 0

Credit Bank X
Debit Stock X

Obviously it wouldn't be that simple but overall the figures will balance out to be close to 0

So unless Microsoft spent a lot of advertising Kinect pre-September 30, gave away a lot of units or had serious problems manufacturing it; the only thing about Kinect that will have change any of the figures is testing



Squilliam on 28 October 2010

So another 6 hours or thereabouts?



Tease.

Seece on 28 October 2010

Thanks for the info Kowen!



 

Shorty11857 on 28 October 2010
kowenicki said:
Shorty11857 said:
kowenicki said:
Shorty11857 said:
kowenicki said:
whatever said:
kowenicki said:
whatever said:

It will be interesting to see the impact of Kinect development costs and if that puts them back in the red (along with Windows Phone 7).



So you think Kinect development cost all happened during last quarter?    That must be the quickest development of a product ever!  3 months from conception to release. 

Kinect development costs will have been mostly accounted for previously.... from here on its marketing costs.

And you base this on what, besides pulling it out of your A@$.


I base it on common sense and having a clue about how these things work......

As far as Kinect is concerned the R&D was done and finished with a while back.  The last quarter will be mostly manufacturing/distribution costs, the next quarter will be heavy on marketing costs.

When you spend a dollar on the R&D, manufacturing or marketing of a product it goes in the accounts that day, you dont hold that dollar transaction item over until a product is near release or is released.

Try not to be so rude and ignorant in future....

 

Manufacturing doesn't go into accounts as a cost until the product is sold or written down

Costs of Producing Kinect minus the value of the closing stock of Kinect at cost = 0 or it should; so manufacturing Kinect won't have any weight on these figures


Not so

There are two parts to accounts...  P&L and Balance Sheet

I can assure you the cost of manufacturing an item appears in the accounts before it is sold or written down/off.

 

 


that's why I said costs, the stock will go to the Balance Sheet but it won't affect profit at all and even including the balance sheet the net effect is 0

Credit Bank X
Debit Stock X

Obviously it wouldn't be that simple but overall the figures will balance out to be close to 0

So unless Microsoft spent a lot of advertising Kinect pre-September 30, gave away a lot of units or had serious problems manufacturing it; the only thing about Kinect that will have change any of the figures is testing


No it wont be that simple due to indirect costs of manufacturing such as labour and buying in of materials... but yes I agree with you.  My point was more that closer inspection of the accounts will show the costs incurred albeit these will be balanced with stock in hand.

Buying of materials and labour are included in the cost of manufacturing which is included in closing stock
I'm doing a masters in Accounting so unless the rules in the US are completely different than the International Standards I'm 100% sure those costs will be included in the value of the stock of KInect. So all costs related to Kinect outside of the cost of making the ones they've given away for free, advertising and testing won't be included in this quarter as a cost

 

Either way the Entertainment division looks set to make some pretty good profits for the quarter



DirtyP2002 on 28 October 2010
kowenicki said:

Qtr 1 2010 numbers for comparison:

 

 

 

Qtr1 2010 and  Entertainment & Devices. Microsoft sold 2.1 million Xbox consoles during the quarter, bringing the install base to about 35 million. Xbox Live revenue grew by 50 percent.

 

Lets see how Qtr1 2011 compares.........

Nice. Where do you get these charts from anyway?



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