Microsoft reports first loss since 1986

Microsoft reported its first operating loss since the company went public, during its results call last night.

The software giant made some revenue gains in the fourth quarter of 2012, rising 4% year-on-year to $18.06bn, but it also reported an operating loss of $492m, equivalent to $0.06 per share.

The main culprit for the loss was online advertising service aQuantive. Microsoft bought the firm back in 2007 for $6.3bn in an attempt to compete against Google’s massive advertising revenues, but the acquisition never paid off and the company suffered a write-down of almost $6.2bn for the impairment of goodwill – touting the business as more profitable than it was.

On top of this, Microsoft also had to defer $540m of revenue related to an upgrade offer on its Windows operating system (OS), again leaving it out of pocket.

Steve Ballmer, CEO of Microsoft, did not want to dwell on the figures showing the first loss for the company in 26 years, but wanted to reassure investors the launch of Windows 8 in October would put the firm back on track.

We're fast approaching the most exciting launch season in Microsoft history

Steve Ballmer, CEO, Microsoft

“We’re fast approaching the most exciting launch season in Microsoft history,” he said. “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.”

Peter Klein, chief financial officer (CFO) at Microsoft, added: “We are focusing our resources in strategic areas that will deliver shareholder value and long-term growth opportunities.”

Although the Windows and Windows Live divisions suffered, other areas within Microsoft shone during the quarter. The server and tools business grew by 13%, due to more sales of its SQL Server and System Center products.

“Our enterprise business is firing on all cylinders and we couldn’t be more excited about the wave of innovation and new releases that position us well for the coming years,” said Kevin Turner, chief operating officer (COO) at Microsoft.

The entertainment and devices division also grew by an impressive 20%, which was largely due to the success of the Xbox games console.

Jennifer Scott Friday 20 July 2012 10:10