Microsoft Profits Drop 32 Percent In March Quarter

Microsoft just announced earnings for its third fiscal quarter. Revenues were down 6 percent to $13.65 billion, and net income was down a whopping 32 percent to $2.98 billion or $0.33 EPS. Analysts consensus was closer to $14 billion for revenues and $0.39 for non-GAAP EPS, which Microsoft met thanks to its cost-cutting measures. Still, this counts as a miss for Microsoft.

The company is exposed to the weaknesses in the economy in general, and soft demand for PCs and servers in particular. Revenues in its Client business (Windows) was down 15.6 percent to $3.40 billion. It’s servers and tools business proved the the healthiest with a 7 percent increase in revenues to $3.47 billion, marking the first time I believe that servers and tools brought in more revenues than the client business. The online business saw revenues decline 14.5 percent to $721 million, and its loss doubled to $575 million.

Microsoft: ‘Consistent exploit code likely’ for IE vulnerabilities

Microsoft today shipped four bulletins with patches for at least 8 documented security vulnerabilities affecting Windows users and warned that “consistent exploit code could be easily crafted” to launch attacks via the Internet Explorer browser.

The Patch Tuesday batch includes fixes for a pair of code execution holes in IE, two bugs in the Microsoft Exchange Server, a remote code execution issue in the Microsoft SQL Server, and three separate flaws haunting users of Microsoft Office Visio.

The Internet Explorer bulletin (MS09-002) should be treated with urgency because the flaws can be exploited to launch drive-by download attacks.

* This security update is rated Critical for Internet Explorer 7 running on supported editions of Windows XP and Windows Vista. For Internet Explorer 7 running on supported editions of Windows Server 2003 and Windows Server 2008, this security update is rated Moderate.

The Microsoft warning that consistent exploit code was likely suggests that it’s very easy for an attacker to host a specially crafted Web site and attack unpatched users who surfed to the rigged Web site.

* The attacker could also take advantage of compromised Web sites and Web sites that accept or host user-provided content or advertisements. These Web sites could contain specially crafted content that could exploit this vulnerability.

Enterprise administrators will also want to pay special attention to the Microsoft Exchange update (MS09-003) which covers two different vulnerabilities that expose users to code execution or denial-of-service attacks.

Microsoft explains:

* The first vulnerability could allow remote code execution if a specially crafted TNEF message is sent to a Microsoft Exchange Server. An attacker who successfully exploited this vulnerability could take complete control of the affected system with Exchange Server service account privileges. The second vulnerability could allow denial of service if a specially crafted MAPI command is sent to a Microsoft Exchange Server. An attacker who successfully exploited this vulnerability could cause the Microsoft Exchange System Attendant service and other services that use the EMSMDB32 provider to stop responding.

The company says it expects to see “inconsistent exploit code” published for this bulletin. However, nCircle director of security operations Andrew Storms says this is a very serious problem.

“This vulnerability means that any cybercriminal sending a well crafted email attachment to an enterprise could gain complete control over the server and gaining one of the keys to the kingdom,” Storms said.

“All kinds of highly confidential and proprietary information pass through an Exchange server every day. Gaining control over it and its content would be a gold mine to any cyber criminal,” he added.

Google says its success is tied to AdSense publishers

The global financial crisis could, at least as far as online advertising is concerned, be in Microsoft's advantage by destabilizing Google. Compared to the Mountain View-search giant, the Redmond company has little to lose in this arena. But Google, which Microsoft Chief Executive Officer Steve Ballmer dubbed a “one trick pony” in the past, is intimately connecting with monetizing search, and almost nothing else. Acting as an intermediary between advertisers and websites, Google is bound to be hurt by the world economic crisis, and this is evident in an email sent out by Kim Scott, Director AdSense Online Sales & Operations to all AdSense publishers.

“We understand that the recent economic turmoil has created a lot of uncertainty in the lives of AdSense publishers. During these difficult times, we're continuing to invest in innovations that improve publisher monetization and advertiser value in the content network. We're focusing on further developing our product offerings and boosting ad performance for publishers. We recently announced advancements in AdSense for search and experiments to make ads more effective,” Scott revealed in the email, courtesy of Venture Beat.

Ballmer has repeatedly indicated that it would persistently gun down for Google until it gained a position that placed it on par with the Mountain View giant on the search engine market. At the same time, just as it is the case for Google, Microsoft also monetizes its search business via advertising. “We're absolutely the underdog. We are David to Google's Goliath,” Ballmer stated during a recent trip to Brazil.

“We're bringing DoubleClick technologies to AdSense publishers, and we'll continue to launch new products and features. We're also continuing to improve our offerings for AdWords advertisers, making it easier for them to target the Google content network. Features for advertisers, such as the new display ad builder, are designed to improve ad performance on AdSense publisher sites,” Scott added.

The letter Google sent out to AdSense publishers is a clear try to dispel the uncertainty generated by the financial crisis. In the financial quarter ended September 30, 2008, Google reported revenue of $5.54 billion, 3% more than Q2 2008, and 31% more than Q3 2007. In mid-October, Eric Schmidt, CEO of Google, also indicated that the company would continue to invest in the evolution of search despite the “poor state of the global economy”.

“We’ll keep driving technological progress, but our best asset will always be our publisher partners. The strength of AdSense lies in the value of the content you bring to users and the quality of the sites you bring to advertisers. Our success is tied to yours. We look forward to partnering with you for the long term, and remain dedicated to helping you succeed,” Scott concluded.