Microsoft Misses Q4 Estimates, Takes $900M Charge on Surface RTs
Microsoft missed analyst estimates of its Q4 2013 earnings and took a $900 million charge on Surface RT tablet inventory.Citing a decline in the PC market, Microsoft missed analyst estimates of its fiscal fourth-quarter 2013 earnings, announced July 18. Microsoft announced quarterly revenue of $19.90 billion for the quarter ended June 30, 2013. Operating income, net income and diluted 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 tablet inventory adjustments. Microsoft recently reduced the price of Surface RTs by $150—from $499 down to $349. However, excluding the Surface charge, Microsoft's earnings were 66 cents per share, short of the 75 cents per share expected by analysts. The quarterly revenue of $19.9 billion also was short of analyst estimates of $20.72 billion the company was expected to earn for the quarter. "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," said Amy Hood, chief financial officer at Microsoft, in a statement. "We also saw increasing consumer demand for services like Office 365, Outlook.com, Skype, and Xbox LIVE. While we have work ahead of us, we are making the focused investments needed to deliver on long-term growth opportunities like cloud services."
Microsoft said its fourth-quarter results also reflect the recognition of $782 million of previously deferred revenue related to the Office Upgrade Offer.