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July 19, 2013 12:05 am GMT

Microsoft Misses Q4 Earnings With $19.9B In Revenue, EPS Of $0.59, Takes $900M Charge Against Surface RT Inventory Adjustments

ht_microsoft_cc_120823_wgMicrosoft just posted its earnings for its fourth financial quarter of 2013. The company reported revenue of $19.9 billion and earnings per share of $0.59. While that’s in line with analyst expectations, it’s worth pointing out that most analysts had revised their estimates downward over the last three months. The Wall Street consensus was that Microsoft would report $20.74 billion in revenue and earnings per share of $0.75. The surprise in this release is that Microsoft says it’s taking a $900 million charge “related to Surface RT inventory adjustments.” That’s quite a blow for Microsoft, which put a lot of resources into this project, which launched to middling reviews and failed to catch on with customers. In the year-ago quarter, Microsoft reported $18.06 billion in revenue and a loss per share of $0.06 — the first quarterly loss per share in the company’s history — because of a massive writedown after its failed aQuantive acquisition. 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. One factor that has been hurting Microsoft — as well as chip giant Intel and others in the PC business — is the general downturn in the PC market and the relatively lackluster reception of Windows 8. As research firm Gartner reported, global PC shipments dropped 11 percent in the last quarter, and while Microsoft has enough other business units to still make a massive profit, this drop definitely weighed on its Windows division. One factor that softens this blow, though, is the fact that many businesses are finally upgrading their old XP machines to Windows 7. One area many pundits continue to look at is Microsoft’s Online Services Division, which reported an $8.1 billion loss in the year-ago-quarter. Since then, though, this division slowly reduced its losses, and last quarter, it was “only” $262 million in the red. This time around, the Online Services division reported a revenue increase of 9% but still posted a loss of $372 million. For its fiscal

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