Write-off pushes Microsoft to a loss; Windows still a concern

Microsoft got the bad news of a Q4 loss out of the door a few weeks ago when it revealed it was writing off $6.2bn, virtually all of its aQuantive acquisition costs (see here), so the formal announcement today in its Q4 and full year results did not trigger shock waves. It is not the one-off loss that is the main concern however, it is  the ongoing decline in Windows revenue.  

As far as the numbers go, Q4 (to June 30 2012) saw a loss of $492m (vs a year ago profit of $5.87bn) on revenue that was up 4% to $18.06bn. This was the first time it had made a loss since it went public in 1986. The numbers were better across the full year with net income of $16.98bn on revenue that was up 5% to $73.72bn. 

All divisions experienced revenue growth except Windows and Windows Live which fell a painful 13%, declines in this division are almost becoming the norm.  It was impacted by flat PC sales but more significantly by the rise of tablets and smartphones, and the related success of competitors like Apple and Google. Falling Windows revenue is another indicator of how important the October release of Windows 8 is to Microsoft - this radical redesign will determine how well it will be able to play in the multi device world. Windows is just one part of a much broader portfolio of course but it is fundamental to Microsoft’s overall success. TechMarketView subscribers can see further analysis of Microsoft’s results in HotViews Extra here. 

Posted by Angela Eager at '09:26' - Tagged: results   software