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As the U.S. economy flirts with recession, Microsoft is pulling the plug on unfinished projects that are not guaranteed revenue drivers, according to Global Equities Research analyst Trip Chowdhry.
"We know of at least two internal IT projects (one worth $1.3 million and other $2.7 million) that have been canceled halfway through deployment," Chowdhry wrote in a research note. "Reasons given to the vendors: 'Re-prioritization of projects' . . . Contacts tell us that when it's tough to get funds, every project is now getting reevaluated, and depending on the relevance to the core business, projects are either accelerated, delayed or canceled."
Last month, when Microsoft CFO Chris Liddell weighed in on the economy, he said the company wasn't feeling the effects of a slowdown -- yet.
"[W]e're cautious on the reported economic softness in the US, but at this point we have not seen any significant spillover to our businesses," Liddell said on the third-quarter earnings conference call in April.
But it could be a different story now. Computer maker Dell Inc. just today said it has seen "conservatism in IT spending in the U.S." (Still, its earnings topped Wall Street expectations thanks to lower expenses.)
Know of any Microsoft projects that have been canned? Give us a shout.
