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How Windows is still a better business than Facebook
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How Windows is still a better business than Facebook

Facebook’s monetary outcomes, revealed yesterday in the company’s IPO filing, confirmed 2011 earnings of $1 billion from gross sales of extra $3.7 billion — translating into a robust 27 % revenue margin. It’s a key ratio to observe as a result of it displays a firm’s effectivity as a business and an funding.

By comparability, Google’s 2011 revenue margin was 26 %, Microsoft’s revenue margin was 33 % in its 2011 fiscal 12 months (resulted in June) and Apple’s revenue margin was 24 % for its 2011 fiscal 12 months (resulted in September). Amazon.com’s revenue margin was a slim 1.3 % for the 12 months.

Amazon is an outlier on this case, given the historically paper-thin margins of the retail business — regardless that the Seattle firm might come beneath extra strain to spice up its margins because it competes with the likes of Apple within the {hardware} business.

The comparability between Facebook and Google makes extra sense, contemplating that they each make the majority of their cash from internet advertising.

Microsoft nowadays a blended bag of PC and server software program, on-line companies and {hardware}. However the Windows business, particularly, is famend for its gigantic revenue margins. So regardless that Facebook and Windows aren’t actually comparable as companies — one makes cash from advertisements, the opposite from software program licensing — it’s an attention-grabbing train to check the flagship product of the PC period with the central service of the social networking period.

In different phrases, when you had $1,000 to take a position, would you give it to Facebook CEO Mark Zuckerberg or to Windows President Steven Sinofsky?

For now, at the least, Windows still guidelines on this metric. Working revenue margin within the Windows and Windows Dwell Division was 65 % in Microsoft’s 2011 fiscal 12 months, in contrast with a 47 % working revenue margin for Facebook.

However notably given the trends on the Windows side, this must be an attention-grabbing comparability to make once more in a couple years.

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