Microsoft FY 3Q14 Earnings Call Notes

This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings. Full transcripts can be found at Seeking Alpha

PC refresh boost has trailed off

“We also saw some challenges this quarter. As expected, the one-time benefit of Windows XP end-of-life PC refresh cycle has now tailed off. Additionally, we ran into unexpected issues in select geographies.”

Weakness in Japan

“our results in China and Japan fell short of our expectations. In Japan, the PC market lagged due to the macroeconomic environment along with the combined impact of XP end of support and the VAT increase last year.”

FX will be a 4% impact to revenue growth

“in Q3 we will start to recognize a higher percentage of revenue from periods with a stronger U.S. dollar than the prior-year comparison. In total, we expect that FX will negatively impact revenue growth by approximately four points in Q3.”

Issues in China

“We have in China currently a set of geopolitical issues that we are working through. We’re very committed to China as a market. We have in fact pockets of good growth in China with our cloud doing fairly well, but at the same time we’re grounded that in the fact that we need more work to do and we’re working through them and then as and when they will work out, we will let you know.”

PC Units about flat, some improvement in the consumer side of the business

“I actually think we agree with most of the benchmarks in terms of PC unit health across business, which has been stable since FY ’13 and across consumer where we see meaningful progress made in unit growth both last quarter and especially this one.”

Windows 10 is to span screens

“The core idea of Windows 10 is to build a device operating system that spans the gamut from no screens to small screens, to PCs and even large screens.”

Cultural change, we do things faster now

“while I think many people want to see it as a finance concept, it’s not. It’s a senior leadership team concept and the leadership environment that I think we’re making collective decisions faster.

I think we are applying our resources to opportunities when we see them. I think we have a freedom to make those choices quickly and I feel very good those about the decisiveness that comes with it, but also the empowerment that we give to people within our organizations to make those calls, to increase our performance without waiting to an annual budget process.”

The new windows upgrade is free because we want everyone to upgrade

“at the highest level, our strategy here is to make sure that the Microsoft Services i.e. cloud services be it Azure, Office 365, CRM Online or Enterprise Mobility suite are covering all the devices out there in the marketplace.

So that, that way we maximize the opportunity we have for each of these subscription and capacity based services. So that’s the core rational for why we are doing cross platform.'”