Sat, Jul 20, 2013 - Page 15 News List

Microsoft’s profit undermined by slow tablet sales

AFP, NEW YORK

Microsoft Corp on Thursday announced a profit of US$4.97 billion in the past quarter, but its results were hit by a writedown linked to disappointing sales of its Surface tablet computer.

Microsoft took a US$900 million charge for “inventory adjustments” for its Surface RT, the device aimed at breaking into the tablet market, which is growing while traditional PC sales are slumping.

Microsoft has not released sales data for Surface, but analysts say the device has been disappointing.

Microsoft has quietly cut the price of its entry-level Surface tablet computer by about 30 percent, to as low as US$349 for US customers, down from the introductory price last year of US$499.

A survey by the research firm IDC estimated that the company sold just 900,000 units in the first quarter, in a global market of about 49 million. Microsoft previously cut the price of the Surface as low as US$199 for education buyers.

Overall, Microsoft said its results were helped by growing revenues from business services, which offset the hit from a lagging personal computer market.

Chief financial officer Amy Hood said results “were impacted by the decline in the PC market,” but added: “We continue to see strong demand for our enterprise and cloud offerings, resulting in a record unearned revenue balance this quarter.”

Revenues in the April-to-June quarter rose slightly to US$19.9 billion from US$18.1 billion a year earlier.

Hood said Microsoft, which traditionally draws its income from the Windows operating system, saw increasing consumer demand for services like its Office 365 online software suite, its Outlook e-mail service, the Skype messaging service and its Xbox Live gaming platform.

“While we have work ahead of us, we are making the focused investments needed to deliver on long-term growth opportunities like cloud services,” she said.

Microsoft shares slid 4.5 percent to US$33.82 in after-hours trade following the release.

The results compared with a loss in the same period a year ago of US$492 million because of a massive US$6.2 billion write-down to reflect the slump in value of its online operations.

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