Microsoft Corporation (MSFT)’s Final Blow?

Admittedly, I’ve never been a huge fan of Microsoft Corporation (NASDAQ:MSFT), but the past six weeks have left a horrible taste in my mouth. PC sales continue to fall, but other PC makers are taking far more effective steps to overcome this obstacle. The sad part? I don’t think the drop in PC sales is even close to Microsoft’s biggest issue.

Good news

Sure, Microsoft Corporation (NASDAQ:MSFT) is pumping out what good news it can, but it may not be effective. Steve Ballmer, CEO, sent out an email to all staff and posted the lengthy memo on the company’s website. The memo described a major “reshuffling” of management and declared the company’s new focus would be on four major “engineering groups.” The first group will be composed of all operating systems (PC and mobile), while the remaining groups will be focused on devices, applications, and the cloud.

This may help the company, but with PC sales dropping for the fifth consecutive quarter, it may need more help than that. Global PC shipments fell another 11% this past quarter. Hewlett-Packard Company (NYSE:HPQ) has tried to offset these declines by offering Leap Motion devices with the purchase of a new PC. The company plans to integrate the Leap Motion Technology directly into its devices in the near future, although no dates have been released for when this may actually happen.

The good news for Apple Inc. (NASDAQ:AAPL) is that, despite PC sales dropping, tablet sales are soaring. Apple’s iPad accounted for 21% of the company’s revenue in 2012, and this number is expected to rise as more and more people shift into the mobile world. It’s not all sugar, spice, and everything nice for these companies; two of them have been involved with the PRISM scandals in the past six weeks, and that’s where the troubles just begin.

The after-effects of PRISM

I have been saying that the biggest asset to all of these companies is their reputations. All of the companies involved with PRISM have tried to re-gain trust among their users/potential users. This was true of Microsoft Corporation (NASDAQ:MSFT) as well — until Thursday.

As I signed on my Facebook Inc (NASDAQ:FB) account yesterday evening, there were multiple posts saying negative things about Microsoft Corporation (NASDAQ:MSFT). In particular, one post said, “Never trust Microsoft? I’d say ‘Yep!!'”. The post included a link to an article revealing Microsoft’s role in helping the National Security Agency decrypt messages that were meant to be private, on platforms such as Outlook.com, web chat, Hotmail email services, and Skype.

If people were leery of trusting these companies shortly after scandal, imagine the burn this will inflict. Add insult to injury, dump salt in the wound, however you want to say it, they did it. With this news being so recent, it is hard to tell the impact it will have on the company. One thing is certain, it won’t be good. It may not have a huge effect, but what effect it does have will not bode well for the company.