AN ACCOUNTING charge related to Microsoft’s ill-fated purchase of an online advertising business led to a loss for the software giant’s last quarter, its first in more than two decades as a public company.
However, while that loss can be played down as an anomaly for a company that has been a reliable moneymaker for decades, weak sales in Microsoft’s Windows business cannot. Microsoft said yesterday that its revenue from Windows fell 13 per cent in the fiscal fourth quarter, which ended June 30th.
Windows sales looked worse than they really were in part because Microsoft had to change how it recognised that revenue because of an offer it extended to people who buy PCs running Windows 7. Under that offer, users can pay a small fee to upgrade to Windows 8 when it comes out in October.
If Microsoft had not had to defer a portion of its Windows sales – $540 million (€444 million) in this case – its Windows revenue would have declined 1 per cent, still a dismal performance that underscores the challenges in the traditional computer business.
Sales in the PC market have stagnated as consumers have diverted their technology spending to more exciting technologies, including smartphones and tablet computers like the iPad.
Microsoft and other companies in the PC industry are hoping to reignite growth in the business with the release of Windows 8, an operating system that has been revamped to work better on touch-screen devices.
In an interview, Peter Klein, Microsoft’s chief financial officer, said sales of PCs to businesses were growing, but consumer sales, mainly in developed markets like the US and Europe, were weak.
Microsoft reported a net loss of $492 million, or 6 cents a share, in contrast to net income of $5.87 billion, or 69 US cents a share, during the same period a year ago.
The company said revenue was $18.06 billion during the quarter, up from $17.37 billion a year ago.
Without the charge related to the company’s $6.2 billion write-down of the value of aQuantive, the online advertising business it acquired in 2007, Microsoft would have earned 67 cents a share.
Weakness in sales of Windows did not surprise analysts, who had been warning of poor computer sales for weeks. – (Reuters)
