Microsoft takes tablet hit

Microsoft’s quarterly earnings missed analyst estimates as the firm took a US$900 million (€690 million) hit from poor sales of its Surface RT tablet.

Microsoft said the charge related to “inventory adjustments” for the device in the three months ending June 30 had a US$0.07 negative impact to diluted earnings per share.

However, its Entertainment and Devices Division – which includes Microsoft’s Xbox games console and Xbox Live entertainment service – did well, with revenues growing 8% in the fiscal fourth quarter.

“Xbox Live transaction revenue grew nearly 20% and is providing economic opportunities for publishers in this soft console market” said Microsoft general manager of investor relations, Chris Suh, on the firm’s earnings call.

Overall, the firm’s revenues for the quarter came in at US$19.9 billion, up 10% year-over-year, but below Bloomberg estimates of US$20.7 billion. Profits were US$0.59 per share, compared to a US$0.06 loss last year, but were also short of expectations.

“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.

CEO Steve Ballmer added: “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.”

“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,” he said.