Published July 18, 2013
Microsoft (MSFT) revealed a big earnings miss Thursday as the tech giant’s sales rose by a softer-than-expected 10% amid continued weakness in the crumbling PC market.
The disappointing results sent Microsoft's shares slumping 5% and underscore why CEO Steve Ballmer unveiled a sweeping restructuring plan last week in an effort to narrow the tech behemoth’s focus.
Microsoft said it earned $4.97 billion, or 59 cents a share, last quarter, compared with a net loss of $492 million, or 6 cents a share, a year earlier.
Excluding one-time items, it earned 52 cents a share, well below the Street’s view of 75 cents
Revenue jumped 10% to $19.9 billion. On an adjusted basis, sales came in at $19.1 billion, trailing consensus calls from analysts for $20.73 billion.
“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,” Amy Hood, Microsoft’s chief financial officer, said in a statement.
Microsoft said its results included a charge of $900 million, or 7 cents a share, tied to inventory adjustments related to the Surface tablet.
While all of Microsoft’s divisions reported revenue increases, they all fell shy of consensus estimates from analysts polled by StreetAccount.
The tech giant’s business division logged a 14% jump in revenue to $7.2 billion, while the Windows arm grew revenue 6% to $4.4 billion.
Microsoft reported a 9% rise in online services revenue to $804 million, matching the 9% increase in sales of server and tools to $5.5 billion. The online services unit posted a loss of $372 million in its online business, compared with a bigger loss of $6.7 billion in the year-before period that was driven by a goodwill impairment charge.
Meanwhile, the company’s entertainment and devices business, which includes the Xbox gaming console, increased sales 8% to $1.9 billion.
Wall Street punished Redmond, Wash.-based Microsoft, driving its shares down 5.08% to $33.64 in extended trading. The slide threatens to eat into Microsoft's 2013 rally of nearly 33%.