So earlier this week, Microsoft announced earnings and expectations for the coming fiscal year. There seems to be a lot of buzz about this $2.4 billion dollar spending that’s planned. Here’s a related snippet:

Microsoft’s Coming Revenue Trade-off

For fiscal 2007, starting July 1, 2006, the company expects revenue in the range of $49.5 billion to $50.5 billion; operating income between $18.7 billion and $19.3 billion and diluted earnings per share somewhere between $1.36 and $1.41.

Those numbers puzzled analysts. The consensus had been for earnings of $1.53 per share on revenue of $49.5 billion, and they wanted to know where that money was going.

[snip]

In her follow-up query, UBS Warburg analyst Heather Bellini said it appeared that over the next few years Microsoft would see accelerated revenue from launches but was willing to sacrifice earnings growth to reinvest in other projects.

Liddell would not comment beyond next year’s guidance but “clearly from our point of view, we’ve made a strategic decision relative to next year where we’re willing to make that trade off to get ahead and also in the third and fourth quarters as well. I don’t want to extrapolate to ‘08 or ‘09.”

This news worried Wall Street. In a research note published after the call, Sherlund wrote that the company’s spending outlook “is quite surprising.”

Obviously I don’t know where the $2.4 billion is going (though I do have some suggestions if we’re short on ideas!) but I’m going to assume that it is going into R&D. This isn’t exactly a leap of faith as that’s what a number of articles and blogs have speculated about.

Alas, Wall Street doesn’t like surprises or increased investment. Here’s what happened to Microsoft stock this week:

Youch.

Not terribly surprising though either – after all, there’s a general opinion that Wall Street tends to reward the stocks of companies that layoff employees. Spending = bad.

At the end of the day though, this reminds me of this portion of testimony to Congress by the President of the Johns Hopkins University:

Remarks by William R. Brody: Testimony to the House Committee on Science

Norm Augustine, now retired CEO of defense giant Lockheed Martin, told me that when he was the CEO of Martin Marietta, the precursor to Lockheed Martin, he one day called in the analysts to announce a series of investments in research that he felt would propel the company way ahead of its competition. Much to his surprise, as soon as he had finished his presentation, the analysts ran out of the room, sold the stock and the price plummeted — and continued to drop over the next 18 months. Puzzled about the negative reaction to this news, Norm asked one of the mutual fund analysts why the stock had dropped. He was told: “Everyone knows it takes 8 to 10 years for research to pay off. But our shareholders only hold stock less than one year. Our fund doesn’t invest in companies like yours that have this kind of management.”

The drumbeat of quarterly results are driving business decisions and drowning out long-term management, investment and innovation strategies. Today, investor patience is in short supply, and the traditional “buy and hold” approach to equity investments is being abandoned by the professionals. U.S. mutual funds are holding stocks for an average of just ten months, a record low, and annual turnover rates are 118 percent, a record high. As Norm Augustine discovered, these short investment horizons pressure CEOs to focus on near-term results. Not long ago, a survey of chief executives by Burson Marstellar found that their number one business priority was shareholder return. The category “Most Innovative” ranked eighth on the CEO’s list, and was a priority for only 23 percent of the respondents. Another survey of financial executives found that fully 78 percent would give up long-term value creation in the company in exchange for smooth earnings. More than half — 55 percent — said they would avoid long-term investments that might result in falling short of the current quarterly targets.

Admittedly, it will be difficult to change Wall Street’s attitudes and habits. But it is terribly important to this country that we begin to try to do so. We can use the tax code to reward the behavior of companies that make significant research investments and take significant risks, just as we can find disincentives to short-term, bottom-line-only thinking. In doing so, we will make holding stock of innovative companies over the long term a more desirable investment, and our national economy more competitive.

Perhaps Google’s policy of not providing guidance is the right one after all. What do you think?

On Friday, I got a chance to meet Niall Kennedy. Actually, we were on the same flight, to the same meeting, but I didn’t know who he was until the meeting. Whoops!

So I started catching up on his blog, and I found a link to a page that is a RSS Publisher’s guide. Being that I own the Feed Detector component in the current Windows Live Toolbar, I find this entry to be valuable – and I hope everyone reads it:

Microsoft Team RSS Blog : Windows RSS Publisher’s Guide (work-in-progress)

Best Practices

The following is a collection of best practices (do’s and don’ts) for how to leverage RSS autodiscovery in your web pages.

DO choose good titles

As you can see in the example above, IE will display the title as you write it in your page. Therefore, it’s a good idea to actually put the title of the feed right there. A few sites we’ve seen have “RSS” as their title.

DON’T list the same feed in different formats

Unless you have a really good reason, it’s not a good idea to have two links (or three!) that provide the same feed in different formats. It just makes the user have to pick between two things that they are not capable of distinguishing between. Pick your favorite format, and just support that.

DO put your most relevant feed first

You are always welcome to put as many feeds as you want in your header, but you should make sure that the one at the top is the one that’s most relevant to the page itself. In IE7 Beta 2 Preview, we have optimized for the most common scenario of having a single feed by making the first (or only) feed in the list one-click away. Getting to that first (or only) feed in the list will be one-click away. Getting to the others will be one or two more clicks.

DO continue providing links to your feed(s) in your web page

There’s no harm in continuing to provide ordinary to your feeds in the web page. In many cases, you can provide a more descriptive text than you can fit in the link element. Whether the user clicks on the Web Feeds button or the user clicks on one of those links, IE will recognize that’s it is a feed and display it properly. Additionally, in some cases — for example, sites with lots of feeds — it’s probably best to simply provide links to those in a list on the page instead of putting two dozen feeds in the header.

Whoops! Looks like my blog is only partially compliant as I offer both ATOM and RSS. Fixed! Now it is RSS only.

If you operate a site that offers Feeds, could you please take some time to follow these best practices?

Thanks!

My semi-mandatory spring break is winding to close. Why was it semi-mandatory? In part because I had accrued too many hours of vacation time (other Softies would do a spit take when they found out how much I had) and in part because my family was here this week.

In some ways, I’m glad to be going back to work. Playing chauffeur for your parents for a week isn’t exactly a vacation either. In fact, I was actually in the office on Thursday to perform a critical time sensitive task, and to restore some balance in my work/life balance – there was too much life.

That said, I got a whole bunch of personal chores done this week, including retinting some of my car windows, cleaning up my personal email account, cleaning up my apartment, buying some new shirts (non-Polo), and working on my written defense on a traffic ticket I got earlier this year.

I also reached 60,000 miles on my car:

That’s not a lot of miles considering I got my car on 5.7 years ago. That’s only about 10.5k miles a year. In California. I guess that shows how close I live to work – as opposed to this guy who drives 370 miles to work and back everyday!

I hope to update this blog more regularly moving forwards – let’s see if I find the time!

MSN Money – PR Newswire Business News: Microsoft Installs Silicon Valley’s Largest Solar Panel System at Its Mountain View Campus: US:MSFT

Microsoft Corp. MSFT is proud to announce the installation of its new solar electric system at the company’s Silicon Valley Campus (SVC). It is the largest of its kind in Silicon Valley. Generating 480kW at peak capacity, this system is composed of 2,288 tiles that will supply enough energy to power nearly 500 homes.

Wow that’s pretty neat. So that’s what all that hammering noise was. Whew… I still remember those rolling blackout days. I hope this can mitigate that situation.

David Weiss in Redmond shows off the Mac Lab at his blog:

David Weiss: A Tour of Microsoft’s Mac Lab

We have lots of Apple hardware. You can see here the old colorful iMacs along with some of the old iBooks. You can also see two of our Lab Technicians working on the backup systems, but more about that later. Up until a few months ago we had every significant hardware revision Apple has ever released since the dawn of time. We even had a section of the Lab we affectionately called the “Mac Nursery” where we kept all the older Macs going. We even had an old SE/30 and IIci and super expensive Mac II all connected via PhoneNet running Spectre, just for fun. It’s always super fun to boot Word 1.0 or Excel 1.0 on these old machines and see how much things have changed.

Wow that’s a lot of Mac Mini’s in that picture.

Click the link to see the plethora of Macs. I’ve been in that lab a few times, it’s pretty neat.

Here in SVC we have one too – perhaps some day we’ll get a tour of that as well.

This article has made its rounds today – and it reflects much of the excitement internally around MSN and Windows Live.

FORTUNE: Microsoft’s new brain – May 1, 2006

Ozzie remembers “vigorous disagreement” over business models based on advertising revenue, vs. those based on transaction fees or traditional licensing.

“It’s clear that in the consumer realm, online advertising is this new economic engine,” says Ozzie. “It’s not as obvious how that engine is applied in the enterprise market.”

But the companywide excitement about the potential of online advertising is palpable.

Let’s face it, everyone loves free stuff. Heck, there’s even a certain segment of people who love rebates.

But how do you get free stuff? When others pay?

And why would someone else pay for you to get free stuff? Because they get value out of it.

That’s one of the reasons why I decided to join the Toolbar team. It’s free! People don’t have to pirate it to use the work that I’m proud of.

Of course there are other reasons too (like being the gateway between the web world and the Win32 world), but free is always good.

I’ve been meaning to gripe about this, but I’ve been incredibly backlogged. Coincidentally, Gene nailed this topic right on the head:

Just as I thought | Gene Cowan’s weblog

The biggest trick in the book for students is the double-spaced report, the art of making a small amount of content seem like much more.
This has become the standard for National Geographic Channel. Every time I watch a documentary on this channel, I’m struck by how they masterfully pad out a show. The first thing they do is reiterate, reuse, and repeat. The same footage will be used over and over, plot points are repeated several times, and the whole show is edited very long, almost to the point of being uncomfortable to watch — you know something is not edited very tightly when you find yourself wondering when they’ll cut to another camera angle.

Click the link to read more – it’s a very good description. I happen to like shows like Megastructures and Seconds From Disaster, but the bumpers (parts before and after a commercial) are painful to watch. Thank goodness my PVR has a 1-minute fast forward. I swear… a 60 minute show is actually about 30 minutes once you subtract out the ads and duplicated parts.

But… even worse than the National Geographic shows are the Travel Channel shows on Las Vegas. I saw 3 recently – they were basically all the same, just in a different sequence.

Thank goodness for PVRs indeed.

I’m off from work this week (in part because I reached a ridiculous number of vacation hours accrued, in part because my parents are in town this week, and in part because I needed to get some personal-life stuff done) – boy a lot has changed in a week!

Bubba, a friend who used to have the office across the hall from mine, is a guest blogger on Scoble’s blog! And this is an entry that he blogged about today:

Scobleizer – Microsoft Geek Blogger ? Blogging and Careers

Some folks are talking about the Boston Globe article on blogging being essential to a good career.

Pretty interesting read! Here’s a snippet:

Blogs ‘essential’ to a good career – The Boston Globe

Employers regularly Google prospective employees to learn more about them. Blogging gives you a way to control what employers see, because Google’s system works in such a way that blogs that are heavily networked with others come up high in Google searches.

And coming up high is good: ”People who are more visible and have a reputation and stand for something do better than people who are invisible,” says Catherine Kaputa, branding consultant and author of ”Blogging for Business Success.”

But pick your topics carefully and have a purpose. ”The most interesting blogs are focused and have a certain attitude,” says van Allen. ”You need to have a guiding philosophy that you stick to. You cannot one minute pontificate on large issues of the world and the next minute be like, ‘My dog died.’ “

Yeah… that’s something I’ve got to work on, on this blog. What would you like to see me blog about?