Microsoft Corporation (MSFT) Windows 8 Did Succeed, Financially Speaking

Page 1 of 2

How much do you think the 100 million Windows 8 shipment press release is worth? Some outspoken critics have been giving a lot of grief over Microsoft Corporation’s (NASDAQ:MSFT) press release, with the strongest critic, Patrick Seitz from Investor Business Daily, stating:

Microsoft is crowing about reaching 100 million Windows 8 licenses sold in roughly the first six months of availability. But the numbers aren’t as rosy as Microsoft is making them out to be. That doesn’t mean that 100 million Windows 8 PCs have been sold and are in use. Microsoft counts a Windows sale whenever a PC manufacturer ships a new computer. So, a good number of those PCs are likely still in the sales channel. Also, many of those PCs sold to businesses were downgraded to Windows 7.

Here’s the fallacy of that logic–the author failed to mention how long a Windows PC remains in the distribution channel. While Microsoft Corporation’s (NASDAQ:MSFT)’s recognition of sales may be a problem, a bigger problem lies in the way this critic laid out his thesis.

Source: YCharts

The days in inventory outstanding formula measures the average amount of days it takes for a firm to sell inventory. The calculation is the average inventory/cost of goods sold. The reason this formula works is that it takes the total cost of inventory on an annualized basis and divides by the amount of inventory the firm has. It can accurately estimate the average amount of days it takes for a firm to clear out its inventory.

In the above figure, Best Buy Co., Inc. (NYSE:BBY) is able to sell its entire inventory within 51 days on average. Dell Inc. (NASDAQ:DELL) is able to sell its inventory in 11 days before having to re-stock, and Hewlett-Packard Company (NYSE:HPQ) is able to sell its inventory in 26.28 days, just under a month.
Implications for the PC industry

I believe Microsoft Corporation’s (NASDAQ:MSFT) has every right to be optimistic. Hewlett-Packard Company (NYSE:HPQ) and Dell Inc. (NASDAQ:DELL) saw no increase in the amount of inventory laying around, despite the Windows 8 launch, and even Best Buy was able to decrease the inventory levels, all while Microsoft was able to increase sales from its Windows segment by 23% year-over-year in the first quarter. Seasonal demand is the weakest in the first quarter of the year. Despite that, Microsoft Corporation’s (NASDAQ:MSFT) was able to post strong results from its Windows division in the weakest season of the year.  This implies that the demand for Windows 8 was strong, and while consumers may not believe it, perhaps the Windows 8 is a much needed success for the PC industry.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

The 10 Biggest Airports in the World

The 5 Most Gang Infested Cities In America

The 34 Smartest Countries in the World

The 10 Countries with the Highest Suicide Rates

The 10 Most Technologically Advanced Countries in the World

The 10 Safest Countries in the World to Live in Peace

The 10 Top Selling Smartphones in the World 2014

The 12 Biggest Shopping Centers in the World

The 10 Friendliest Countries in the World

Qihoo 360 Technology Co Ltd (QIHU), Actavis plc (ACT), Yahoo! Inc. (YHOO) Among 20 Long Ideas from Sohn Canada

The 10 Laziest Countries in the World

The 10 Most Polluted Countries in the World

The 10 Most Dangerous Cities in America 2014

The Top 10 Gold Producing Countries in the World

The 10 Tallest Buildings in the World

The 10 Richest Stand Up Comedians in the World

The 10 Fattest Countries in the World

The 5 Best Summer Jobs for Teens

The 10 Most Religious Countries in the World Keeping the Faith

The 10 Most Educated Countries in the World

The 10 Most Popular Cell Phones in the World

The 10 Drunkest Countries in the World

The 10 Most Expensive Private Schools in the World

The 10 Smallest Countries in the World

Walking Dead Season 5 Spoilers You’ll Wish You Didn’t Know

The 10 Poorest Countries in the World

The 10 Greenest Countries in the World

The Top 10 Countries with the Highest Population in the World

The 10 Most Visited Countries in the World

The Top 10 Star Wars Characters in the Iconic Series

The 10 Most Expensive Android Phones in the World

5 Reasons Why The Illuminati Is Real and a Threat to Society

The 6 Scariest Halloween Costumes Ever Screamed At

The 4 Biggest Hedge Fund Managers in the World Today

The 15 Most Densely Populated Countries in the World

The 10 Biggest Tea Drinking Countries in the World

Top 6 Ways to Improve Your Checkout Process and Close Sales

The 5 Most Profitable Online Businesses You Can Start Today

The 20 Most Profitable Hospitals in the US

The 5 Most Profitable Home Businesses to Start

The 7 Teams that Will Win the Stanley Cup in 2015

The Top 10 Most Expensive Digital Cameras to Snap Stunning Shots With

The 10 Highest Quality Fast Food Restaurants In America Today

The 8 Best Halloween Decorating Ideas to Spook Up Your House

10 Marvel Women that Should Get a Movie Right Now

The 20 Best Remixes of Popular Songs that Will Make You Forget the Originals

7 Most Expensive Cities in the World

5 Least Expensive Cities in the World

10 Celebrities Who Believe In Scientology

10 High Margin Food Products to Build a Business Around

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!