Microsoft Guidance Change Leads To MASSIVE Confusion

October 23, 2009

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CNBC Blows Microsoft Guidance Cut, Creaming Stock (MSFT)

Courtesy of Jay Yarow and Joe Weisenthal at Clusterstock

Update: At about 10:50 ET this morning, CNBC and WSJ’s Digits Blog reported that Microsoft had lowered guidance on its conference call. The stock immediately tanked.

What Microsoft actually lowered was OPERATING EXPENSE guidance. In other words, the company said it would spend less than it previously thought. This is good news, not bad, so all else being equal, it’s good for the stock.

About 10 minutes after reporting a guidance cut, CNBC came back and said the lowered guidance referred to costs.

Previously,

Microsoft Guidance Change Leads To MASSIVE Confusion (MSFT)

Update: We’re still trying to figure out what’s going on here, but both CNBC and and WSJ’s Digits Blog reported that at 10:50 Microsoft lowered revenue guidance.

Then about 10 minutes later CNBC came back and said the lowered guidance referred to costs. Either way, the confusion here is massive and significant, but we’re not clear whether the error was on Microsoft’s side or on the media’s side.

(A user error on our part led to us accidentally quitting the call 20 minutes in.)

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On its earnings call, Microsoft (MSFT) lowered its guidance for cost in the next quarter to $26.2 to $26.5 billion from $26.7-$26.9 billion.

Other notes:

Headcount reduction of 4% was biggest in company’s history.
Online ads were down 3%
Xbox revenue up 50%
Microsoft says it will get not revenue contribution from the Yahoo deal this fiscal year.
As a matter of fact it expects $200 million in costs from the deal.
Excited about Windows 7
Cashback program on search not much of an impact in the quarter