Los Angeles, CA – Microsoft Corp.’s foray into the tablet computer market proved costly in the fourth quarter. The world’s largest software company booked a $900 million write-down to account for the deep price cut it applied to its Surface RT tablet this week, a move to spur sales amid sluggish demand.
Subscribe to our Daily Roundup Email
The Redmond, Wash.-based software giant cut the Surface RT’s price to $349. The $150-per-device cut contributed to fourth quarter earnings that fell short of Wall Street forecasts, but even without the charge, earnings would have missed expectations.
Microsoft also saw revenue from its flagship Windows operating system decline 6 percent after excluding the late recognition of revenue from last year when it offered discounted upgrades to users of older systems.
The reception to its latest operating system, Windows 8, has been poor and the results reflected that. Analysts believe the new operating system is contributing to the longest slump in personal computer sales.
Microsoft shares fell 3.5 percent to $34.19 in after-hours trading after the results came out.
Despite weakness in key areas, revenue and profitability improved in Microsoft’s other lines of business, including enterprise software, servers and tools, the Xbox video game division and the Bing search unit.
Net income in the April-June quarter came to $4.97 billion, or 59 cents per share, reversing a loss of $492 million a year ago when it wrote down almost the entire value of its 2007 purchase of online ad service aQuantive.
Excluding the Surface charge, earnings were 66 cents per share, short of the 75 cents per share expected by analysts polled by FactSet.
Revenue grew 10 percent to $19.90 billion, also below the $20.72 million expected.
Windows 8 is Garbage.
I’m holding on to my XP’s for as long as I could and then start switching over to Apple products if Microsoft can’t get their act together.
I bought a computer with win 8 on it. I want to break it in half it is so disgusting to use. win 7 was a winner, now microsoft is trying to shaft us with their disgusting operating system. take warning – stay away from it. if you don’t believe me, then try it and cry!
I’ve been using 8 for couple of months now and I love it! Yes, it takes some getting used to because it has much less in common with 7 than 7 had with Vista or XP, but, after initial learning curve, men of average intellect will have no problems with it and find it much more powerful than it’s predecessors. Having said that, 8.1 is on its way, some say August, some September, so if you intend to get a new laptop now and can wait a month or two, I advise you do so: it is going to be significantly easier to get used to. And don’t go for the promise of free upgrade; I’ve done that with 7 and to this day regret it: where do I go to get 15 hours of my life back? In any case, get the one with the touch screen, you will appreciate it quickly.
Gut shabbos.