8 Interesting Tidbits From Microsoft's Q3 Earnings

1. Microsoft's Advertising Campaign Is Paying Off

Microsoft's $300 million advertising campaign led by advertising industry stalwarts Crispin Porter + Bogusky is having a measurable effect on Windows adoption: Since the start of the campaign last year, there has been a 10 percent increase in market preference for Windows PC, according to Microsoft CFO Chris Liddell.

2. Microsoft Plans To Cut Back On H-1Bs

Microsoft in fiscal year 2010 will reduce overall H-1B visa applications by 20 percent, and new hire visas by 40 percent, Liddell said. Microsoft will create between 2,000 and 3,000 new jobs in new, high growth areas over next 18 months, and the majority of these will be U.S. workers.

3. Microsoft Is A Good Place to Get Laid Off From

Liddell said Microsoft is on track to eliminate up to 3,600 positions in research and development, marketing, sales, finance, legal, human resources, and information technology by June 30, 2010, to go along with the 1,400 it laid off in January.

Microsoft recorded a $290 million charge for the total planned layoff of 5,000 employees. OK, so this isn't how severance really works on the balance sheet, but that would amount to $58,000 per laid off employee.

4. Product Launch Wave Is Coming

With Windows 7, Office 2010, Exchange 2010, and potentially a new search product all coming out in the next year, Microsoft is set for one of the busiest periods in its history. The problem, according to Liddell, is that it looks right now like these products are going to be launched in an environment of soft demand.

Still, Liddell says Microsoft is aware of this reality and will stay the course. "Clearly we think that it's the right thing to do," he said. "At the moment, it's about surviving the economic reset, and going into the growth pickup with a very good set of new products. And the environment of one to two years out starts to look more interesting."

5. Windows Azure Will Change Business Models

Windows Azure will start to change Microsoft's traditional business models, but it'll take a couple of years for the forthcoming cloud operating system to start generating a noticeable influx of revenue. After Azure's release, "we will start to see more online driven versions of some of our key products, but the revenue impact will be relatively modest in 2010, and more in 2011," Liddell said.

6. Microsoft Experiences A First

Sales fell 6 percent during the quarter $13.65 billion, marking the first year-on-year decline in quarterly revenue since Microsoft became a public traded company in 1986. This didn't come as a huge surprise, however, as Microsoft, like the rest of the IT industry, is slogging its way through the worst recession in several decades.

7. Some Cash Cows Still Giving Milk

Office Sharepoint Server, Office Communications Server, and Dynamics CRM all grew more than 20 percent during the quarter, Liddell said.

8. Windows Netbook Attach Rate Doesn't Lie

Netbooks, which have been gnawing away like termites at Microsoft's Windows client revenue, now represent 10 percent of total PC shipments, Liddell said. In what is becoming a common message from Microsoft executives, Liddell pointed out that with Windows attach rates on netbooks well north of 90 percent, it's clear that customers prefer Windows on these machines.

Meanwhile, Microsoft's sales of premium Windows SKUs like Vista Business and Vista Ultimate were down over 20 percent during the quarter, which Liddell attributed to weakness in the business segment of the PC market and the trend of companies delaying hardware refresh cycles.