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 44 percentage points in 21 months Learn how!

Lists

The Top 10 States With Fastest Internet Speeds

10 Best Places to Visit in USA in August

Top 10 Cities to Visit Before You Die

Top 10 Genetically Modified Food In the US

15 Highest Grossing Movies Opening Weekend

5 Best Poker Books For Beginners

10 Strategies Hedge Funds Use to Make Huge Returns

Top 10 Fast Food Franchises to Buy

10 Best Places to Visit in Canada

Best Summer Jobs for Teachers

10 Youngest Hedge Fund Billionaires

Top 10 One Hit Wonders of the 90s

Fastest Growing Cities In America

Top 10 U.S. Cities for Freelancers

Top 9 Most Popular Free iPhone Apps

Top 10 Least Expensive Private Business Schools in the US

Top 15 Most Expensive Countries in the World – 2014

Top Businesses to Invest In

Top 5 Things You Might Be Doing Wrong With Your Business

Top 5 Strategic Technology Trends in 2014

Top Rags to Riches Stories

Parenting Behavior That Promotes Future Leaders

Top 5 Mistakes Made by Small Businesses

Top 5 Most Common and Potentially Devastating Financial Blunders

Top 5 Highest Paying Jobs for Web Designers

Top 6 Most Respected Professions that Also Pay Well

Top 5 Pitfalls Investors Should Avoid

Top 6 Lawyers and Policy Makers Under 30

Top 6 New Year’s Resolutions for Entrepreneurs

Top 7 Locations to Check in on Facebook

Top 5 Mistakes made by Rookie eBay Sellers

Top 7 eBook Publishers in 2013

Top 6 Health Industry Trends in 2014

5 Lessons for Entrepreneurs from Seth Godin

Top 5 Success Tips from Jordan Belfort – the Wolf of Wall Street

Best Master’s in Finance Degree Programs

Top 6 Earning Celebrities Over 50

The most expensive sports to play

Top 7 Earning Celebrities Under 25

Best 7 Online Courses to Take: Free Finance MOOCs

Top 6 Bad Habits that Promote Failure

20 Most Valuable Soccer Teams in the World in 2013

12 Most Expensive Countries for Foreign Students

Top 30 Most Influential Women in the World

Top 20 Most Expensive New Year Eve Shows

Top 5 Best Vocational Careers

Top 10 Jobs for 2014 by Salary Gain (Predictions)

Top 5 Digital Trends for 2014

Top 6 Things You Can Do To Increase Your Productivity

Top 9 Trending Smartphones in 2013

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!