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Microsoft Announces First Ever Quarterly Loss

By - Source: Microsoft | B 40 comments

But it's actually not that bad.

Microsoft posting a loss for the first time in its history was more dramatic than the stock reflected, being down about 1.4 percent on Friday. Microsoft burdened its online division with a $6.19 billion impairment charge for the loss in value of Aquantive. The result was a $492 million bottom line loss on record revenue of $18.06 billion. One year ago, Microsoft reported for the second calendar quarter (fourth fiscal quarter) revenue of $17.372 billion and a profit of $5.87 billion.

What is more notable than the "loss" is that most of Microsoft's business are healthy and are driving revenue and profitability increases. Sales of the Business unit (which includes Office), climbed from $5.87 billion in the second calendar quarter (CQ2) 2011 to $6.29 billion in CQ2 2012. Server division sales climbed from $4.52 billion to $5.09 billion and the entertainment unit jumped from $1.49 billion to $1.78 billion on record sales of 1.1 million Xbox consoles, 15 percent growth of Xbox Live subscribers and slowly improving Windows Phone sales.

The concerns are anchored in the Online division, which improved its loss by $266 million with an operating loss of $479 million (down from $745 million last year). Revenue was $0.74 billion, up from $0.68 billion in CQ 2011. It is clear that Microsoft is still struggling to make its Online business bring in a profit. The other interesting weakness is Microsoft's Windows division. Total revenue was $4.69 billion, but Microsoft is deferring Windows 8 upgrade revenue of $0.54 billion and about the same again for the current quarter. One year ago, Windows revenues were $4.74 billion and sales peaked in the third calendar quarter 2011 at $4.87 billion. The fact that Windows 8 is on the horizon surely impacts sales, but the persistent decline since CQ3 of 2011 to $4.74 billion in the fourth quarter and to $4.62 billion in the first quarter of 2012 is more pronounced than we would have expected.

Of course, Microsoft says that Windows 8, scheduled for an October 26 release, will drive PC sales. Due to the upgrade offer, the company expects Windows revenues in Q3 and Q4 to slightly trail the growth of the PC market. Overall revenue growth will be in the "high teens", Microsoft said.

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  • 22 Hide
    zorky9 , July 20, 2012 11:45 PM
    That's not too bad. The impairment hit will actually provide some tax shelter for them for the year.

    Their Q3-Q4 performance will actually be the thing to watch for.
  • 19 Hide
    Anonymous , July 20, 2012 11:42 PM
    There will be more losses with Windows 8
  • 12 Hide
    Anonymous , July 20, 2012 11:51 PM
    This is mostly due to the write-off of aQuantive, MS had a record quarter http://www.techatron.net/2012/07/microsoft-reports-192m-q4-net-loss.html

    also Microsoft managed to increase Skype usage by 50 percent http://www.techatron.net/2012/07/microsoft-managed-to-increase-skype.html

    and finally launched Office Web Apps for SkyDrive http://www.techatron.net/2012/07/microsoft-launches-office-web-apps-for.html
Other Comments
  • 19 Hide
    Anonymous , July 20, 2012 11:42 PM
    There will be more losses with Windows 8
  • 22 Hide
    zorky9 , July 20, 2012 11:45 PM
    That's not too bad. The impairment hit will actually provide some tax shelter for them for the year.

    Their Q3-Q4 performance will actually be the thing to watch for.
  • 12 Hide
    Anonymous , July 20, 2012 11:51 PM
    This is mostly due to the write-off of aQuantive, MS had a record quarter http://www.techatron.net/2012/07/microsoft-reports-192m-q4-net-loss.html

    also Microsoft managed to increase Skype usage by 50 percent http://www.techatron.net/2012/07/microsoft-managed-to-increase-skype.html

    and finally launched Office Web Apps for SkyDrive http://www.techatron.net/2012/07/microsoft-launches-office-web-apps-for.html
  • 6 Hide
    CaedenV , July 20, 2012 11:51 PM
    slabboOh how the tables have turned so dramatically in just 20 years.

    um.... what on earth are you talking about? If you read the article it is only one division that is negative, and the OS division is 'less positive' but still making 4.6 Billion dollars... in one quarter. Just about every other department grew, including WP sales (surprising considering how many of us are waiting for WP8), and xBox consoles and Live subscriptions when a new console will be coming ~Christmas 2013 and everyone in the gaming world knows it.
  • -1 Hide
    Anonymous , July 20, 2012 11:52 PM
    this is due to aQuantive write-off http://www.techatron.net/2012/07/microsoft-reports-192m-q4-net-loss.html

    also microsoft managed to increase Skype usage by 50 percent http://www.techatron.net/2012/07/microsoft-managed-to-increase-skype.html

    and finally just launched Office Web Apps for SkyDrive http://www.techatron.net/2012/07/microsoft-launches-office-web-apps-for.html
  • 0 Hide
    Anonymous , July 20, 2012 11:58 PM
    No this quarterly report is probably only a hint of things to come. Lot's of hopes pinned on Windows 8 across all platforms. Phones,PC's, Tablets. None of which holds big promise for Microsoft or its partners.
  • -5 Hide
    SteelCity1981 , July 21, 2012 12:03 AM
    The fact that Windows 8 is coming means stale sales and more trouble for Microsoft. lol
  • 1 Hide
    halcyon , July 21, 2012 12:20 AM
    Oh no...the sky is falling! The end is near!
  • 10 Hide
    willard , July 21, 2012 12:26 AM
    Good to see nobody's missing an opportunity to bash Windows 8. Wouldn't want the comments to be filled up with meaningful posts, would we?
  • 6 Hide
    nforce4max , July 21, 2012 1:12 AM
    Billions billions there is sure a lot of billions.... This shouldn't hurt them to much considering how profitable the company is in it's other investments.
  • -4 Hide
    rds1220 , July 21, 2012 1:12 AM
    Get use to it Microsoft there is going to be even more loses when no one buys shitty Windows 8.
  • -9 Hide
    jkflipflop98 , July 21, 2012 1:22 AM
    LOL remember back when Tom's used to have people knowledgeable about technology post here? Now it's all about "Microsoft sucks!" and "AMD rules!". Rofl.
  • 1 Hide
    Anonymous , July 21, 2012 1:28 AM
    windows 8 is going to screw their balance sheet after this. At least they are pretty well diversified tho, so they can bury the crappy sales that will be coming.
  • 5 Hide
    freggo , July 21, 2012 1:42 AM
    Reads like a 'strategic loss' only.
    Accounting procedure related, not actual $$ loss.
    M$ certainly does not have the profit margins that Apple can command at the moment; but in the long run my money would still be on M$, and not on someone like Apple.
  • 1 Hide
    applegetsmelaid , July 21, 2012 2:02 AM
    "The result was a $492 million bottom line loss" - But it's actually not that bad.

    Do you know how many ding dongs that would buy?!
  • 0 Hide
    nicodemus_mm , July 21, 2012 2:42 AM
    slabboOh how the tables have turned so dramatically in just 20 years.


    Problem with reading comprehension? They had a record revenue of $18.06 Billion and if it weren't for the impairment charge from Aquantive they would have had roughly $5.7 Billion in profit. The company is very healthy... at least til Win8 gets here and MS sees just how un-phone a desktop really is.

    My guess is that there will be a Value Pak or something similar that comes out later to add a Start menu and ditch the Metro UI. If not, well... I bought extra Win7 licenses because of Win8. I'm not going to get stuck with that crap while they figure out that it's WinME 2.0 and scurry for a solution.
  • 4 Hide
    molo9000 , July 21, 2012 2:52 AM
    They didn't "really" make a loss this quarter.
    They just realized that the 6 billion they spent for Aquantive 5 years ago are gone. Money changed hands 5 years ago, but the loss shows up in their books now.
  • -2 Hide
    p05esto , July 21, 2012 3:58 AM
    Windows 8 is going to go down in flames and be faaaaar worse than Vista. I actually like Vista SP2 very much, I like it better than Win7 in many ways. but regardless, I've used Win8 enough to know I freaking hate it. I have so much hate for that OS that I will leterally move to a different OS should MS keep it around in Win 9. I can wait for one OS cycle before abandoning ship....but no more than that. There's no excuse for Win8 and how horrible it is, no excuse, it just sucks.
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