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Microsoft loses $900 million on Surface RT, makes $5 billion profit

updated 06:09 pm EDT, Thu July 18, 2013

Charge for Windows RT to offset unexpectedly low demand, idle inventory

Microsoft today announced quarterly revenue of $19.90 billion for the quarter that ended June 30. Operating income, net income, and earnings per share for the quarter were $6.07 billion, $4.97 billion, and $0.59 per share respectively. These financial results include a $900 million charge, or a $0.07 per share impact, related to Surface RT inventory adjustments as a result of unexpectedly poor sales. This was offset in part by $782 million of previously-deferred revenue related to the Microsoft Office upgrade offer from earlier in the year.

Microsoft Business division revenue grew 14 percent for the fourth quarter and three percent for the full year, adjusting for the recognition of previously-deferred revenue related to the Office Upgrade offer. Server and Tools revenue grew nine percent for the fourth quarter and nine percent for the full year, driven by double-digit percentage revenue growth in SQL Server and System Center.

The Windows division revenue grew six percent for the fourth quarter and five percent for the full year. Excluding the impact of the prior-year Windows Upgrade Offer revenue deferral, Windows division revenue decreased six percent for the fourth quarter and one percent for the full year. Online Services division revenue grew nine percent for the fourth quarter and 12 percent for the full year, driven by an increase in revenue per search and volume. Bing's organic US search market share was 17.9 percent for the month of June 2013. Entertainment and Devices division grew eight percent for the fourth quarter and six percent for the full year. During the quarter, transactional revenue within Xbox Live grew nearly 20 percent.

"While our fourth quarter results were impacted by the decline in the PC market, we continue to see strong demand for our enterprise and cloud offerings, resulting in a record unearned revenue balance this quarter. We also saw increasing consumer demand for services like Office 365, Outlook.com, Skype, and Xbox Live," said Amy Hood, chief financial officer at Microsoft. "While we have work ahead of us, we are making the focused investments needed to deliver on long-term growth opportunities like cloud services."

"We are working hard to deliver compelling new devices and high value experiences from Microsoft and our partners in the coming months, including new Windows 8.1 tablets and PCs," said Steve Ballmer, chief executive officer at Microsoft. "Our new products and the strategic realignment we announced last week position us well for long-term success, as we focus our energy and resources on creating a family of devices and services for individuals and businesses that empower people around the globe at home, at work and on the go, for the activities they value the most."



By Electronista Staff
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