Microsoft Needs Cleaning Up

Microsoft's (MSFT) woes continued this quarter as was evident from their Q2 results announced yesterday (see earnings call transcript).

Q2 revenue of $16.6 billion recorded annual growth of only 1% and sequential growth of 10%. The market was looking for revenue of $17.1 billion. EPS of $0.47 was also 2 cents shy of the market's expectations. EPS dropped one cent sequentially and 6% over the year. This was also the fourth consecutive year of margin decline for the company.

To get back on track, they are focusing on three key areas. First, innovation with products such as Windows Azure, Office 14 and Windows 7. Second, market share, which they have been improving through Xbox sales and the hypervisor market. And third, efficiency and effective resource prioritization through rightsizing and careful evaluation of all investments.

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