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Business News Digital
Microsoft down, Apple up, Jobs health claims questioned
By CMU Editorial | Published on Friday 23 January 2009
Wall Street was apparently stunned yesterday by Microsoft’s disappointing financial results. The IT giant warned the investment community that both its revenues and profits are likely to fall in the next two quarters, and that it plans to make 5000 people redundant. Ha, anyone would think there was a recession going on. The Windows company’s share price dropped 9 percent.
Other cuts will be made at the firm – in particular on travel expenditure – as it tackles tricky economic times, plus a new threat from the increasing popularity of economy line ‘netbooks’, the lower-powered lower-priced laptops designed for simple web and word processing tasks.
Windows gets less money each time its operating is installed on one of the economy line computers compared to a proper PC or laptop, plus some consumers are opting for the even cheaper netbooks that run on Linux operating systems, whereby Microsoft earn nothing.
Unfortunately for Microsoft, their gloomy financial forecasts followed an upbeat report from rivals Apple. The iPod maker saw revenues rise in the last quarter of 2008, despite all the credit crunch collapse, and posted better than expected profits of $1.6 billion.
That good performance was aided by the continued growth of iPod and iPhone sales. Apple CEO Steve Jobs remarked: “Even in these economically challenging times, we are incredibly pleased to report our best quarterly revenue and earnings in Apple history – surpassing $10bn in quarterly revenue for the first time ever”.
If Microsoft are jealous of Apple’s good financial performance in such a fragile economy, they might take heart at gossip that the firm is under investigation by the US’s Securities And Exchange Commission over allegations they’ve been dishonest about Jobs’ much previously reported ill health.
As previously reported, rumours that cancer survivor Jobs is ill have been doing the rounds for months. It has bigger implications than just Jobs own well-being because City types see the CEO as being so crucial to the IT firm’s success, just the thought he might have to permanently step down tends to send the Apple share price into a frenzy.
Apple denied anything was wrong with their top man, and then admitted he had a minor “hormonal imbalance” that had led to weight loss, and for which Jobs was receiving treatment. It was then announced his condition had become “more complex” and that he’d be stepping down from active duty for the IT firm until the summer while he recovers.
Companies are not obligated to reveal details about the health of their execs, but when they do so investment regulators like the SEC prefer official statements to be accurate.
The regulator is reportedly investigating whether the initial “hormonal imbalance” statement was a bit dishonest – a bid to end gossip and falsely reassure investors all was fine – or whether that really was the medical opinion at the time. It’s not clear what they could do if the initial health statement did prove to be some cover up spin.
