Transcripts

"Commentary"-Microsoft's Setbacks Prove Lucrative

SUSIE GHARIB: In tonight's commentary, the virtues of being out of fashion. Here's Justin Fox, business and economics columnist at "Time" magazine.

JUSTIN FOX, BUSINESS & ECONOMICS COLUMNIST, TIME: It is hard to think of a technology company less fashionable today than Microsoft. Ten years ago, Bill Gates' software juggernaut was poised to rule the world. It dominated personal computing, while longtime rival Apple computer flailed. It appeared to be on its way to taking over the Internet and making big inroads in mobile devices. It was so dominant that the Justice Department sued it in 1998 for antitrust violations.

Now, Apple rules the lucrative business of digital music players and is beginning to regain lost ground in personal computers. Far from taking over the Internet, Microsoft has been reduced to celebrating being allowed to pay $240 million for a tiny stake in facebook. The company has made inroads in video gaming with Xbox, but that operation is only barely profitable. It also just lost an antitrust case in Europe, but that seemed more a bizarre throwback than a sign of current strength.

There's only one thing complicating this picture of a once-great company in decline. It's that last week, Microsoft reported an after-tax profit of $4.3 billion in the quarter that ended in September. That's more than 10 times what it was making a decade ago and puts Microsoft among the most profitable enterprises in the land, a territory dominated by giant oil companies and banks. Microsoft's profits, unlike theirs, are growing and rapidly. It's true that Microsoft's potential no longer seems boundless and that it no longer strikes fear and awe into the hearts of competitors. But man, it makes a lot of money. Clearly, there's something to be said for being unfashionable. I'm Justin Fox.