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

Biotech Insider Alert - $6 Stock To Hit $40

$200 Million Dollar Healthcare Hedge Fund's #1 Best Idea Right Now

The best healthcare hedge fund out there right now is one of the largest shareholders in this biotech stock. The fund returned more than 20% in each of the last 2 years with a virtually fully hedged portfolio, and it's sending out a BUY signal on this biotech stock. Get your FREE REPORT today (retail value of $300)

This is a FREE report from Insider Monkey. Credit Card is NOT required.
Click here to Read Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 74 percentage points in 2.5 years. Our beta is only 1.2 (download a FREE newsletter and see the details inside)

Lists

Best Selling Magazines in the World

Shortest People in History

The Most Celebrated Holidays in the World

Most Expensive Handbag Brands in the World

Top Selling Comic Book Issues of this Century

The Most Powerful Women in Politics

Best Paid DJs

Most Rebellious Female Artists

Best Paid TV Actresses of 2014

Best Paid Actors of 2014

Most Expensive Horses in the World

Tallest People Ever

Most Encouraging Feminist Celebrities

Best Paid Supermodels of 2014

Top 10 Suburbs for Retirement in 2015

10 Wealthiest Cities in America

Top 10 TED Talks for Entrepreneurs

Best TED Talks on Education

25 Most Dangerous Places to Live in America

Top 10 Ski Resorts in the United States – 2014 List

Top 10 Most Remote Places in the World

Most Visited Museums in the United States

Wealthiest Photographers in the World

Most Famous Gay Athletes

The World’s Most Famous Circuses

Best Hair Stylists

Most Popular NASCAR Drivers

The Best Romance Movies of all Time

The Most Wanted Drug Lords

The Oldest Money Managers

The Greatest Directors in the World

Largest Animals in the World

World’s Most Expensive Desserts

Best Selling Comic Books of All Time

A-list Actors who Sabotaged Their Career

Rappers With a College Degree

The Best Jazz Albums of all Time

The Most Influential Jazz Musicians

The World’s Most Famous Photographers

The Best Oscar-Winning Songs

Most Influential Choreographers Ever

Most Expensive Department Stores in the World

The Most Expensive Stolen Paintings in the World

The World’s Most Expensive Teas

Top Oscar Record Holders

The Most Expensive Flowers in the World

Countries With a Booming Film Industry

Most Expensive Cupcakes in the World

Uncommon European Escapes

The Most Stolen Artists in History

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 129% in 2.5 years!! Wondering How?

Download a complete edition of our newsletter for free!