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Microsoft Posts 4Q Loss on Write-Down, Deferment

GVA Reseach’s David Garrity, Zacks.com Senior Equities Strategist Jared Levy and FBN’s Shibani Joshi break down Microsoft’s fourth-quarter earnings report. Video

Microsoft weighed in with mixed fiscal fourth-quarter results, as the company posted a net loss as a result of a large one-time charge related to an acquisition, and deferred revenue related to its Windows Upgrade Offer.

The company reported a $6.2 billion write-down related to its 2007 acquisition of aQuantive Inc. an online advertising firm, and also deferred $540 million in revenue during the quarter as a result of a promotion allowing purchasers of Windows 7 the option to upgrade to Windows 8, the new version of the operating system expected to launch this fall, at a discount.

The Redmond, Wash.-based firm swung to a fiscal fourth-quarter loss of $492 million or 6 cents a share, compared with a year-ago profit of $5.87 billion or 69 cents a share.  Excluding the charge and revenue deferment, the company posted adjusted earnings of 73 cents a share, up from year-ago adjusted earnings of 69 cents a share.

Revenue rose to $18.06 billion, from $17.37 billion, one year ago.  The results were mixed, as the Microsoft narrowly missed on the top-line, as analysts polled by Thomson Reuters were expecting earnings of 62 cents on revenue of $18.13.

Sales from the company’s business division increased 7%, and the division boasted that Microsoft Office, the company’s business-productivity software suite, is now installed on more than 1 billion PCs.  Revenue from the entertainment and devices business rose 20%, as the servers and tools division saw revenue growth of 13% during the fourth quarter.  Online services revenue rose 8.1%, as the Windows and Windows Live division saw revenue slip 13%, including the impact of the company’s Windows Upgrade Offer.

“We delivered record fourth quarter and annual revenue, and we’re fast approaching the most exciting launch season in Microsoft history,” said Steve Ballmer, chief executive officer of Microsoft, in a statement. “Over the coming year, we’ll release the next versions of Windows, Office, Windows Server, Windows Phone, and many other products and services that will drive our business forward and provide unprecedented opportunity to our customers and partners.”

Shares of Microsoft were trading nearly 2% higher in after-hours trading.  Year-to-date, the stock is up more than 18%.