Microsoft reports 4th quarter loss, following a write-down

by Darcie | Friday, Jul 20, 2012 | 453 views

An accounting charge in connection with an ill-fated acquisition of online advertising business by  Microsoft has led to losses in the last quarter for the software giant, its first in almost 2 decades after going public.

Although the loss can be played down as a one time anomaly for a firm that has been a reliable moneymaker for decades, the weak sales in the Windows business can’t be.

According to Microsoft the revenue from Windows for the quarter ending June 2-012, was down by 13 % as compared to the same quarter last year.

The sales of Windows seemed worse than they actually were mainly because it had to change how the revenue was recognized as a result of the offer it made to people buying PCs having Windows 7. As a part of the offer, users can pay $94.99 for upgrading to Windows 8 when it comes out in October.

If Microsoft didn’t have to defer a part of the Windows sales, of $540 million, the revenue would still have declined by 1 per cent, which still would have been a dismal performance that underscores the challenges being faced in the traditional PC business right now.

Sales of PCs have stagnated as consumers have been diverting to more exciting technology in the form of smartphones and tablet computers in the likes of the Apple iPad.

Microsoft along with other companies in the PC industry are looking to reignite the sales and business through the release of Windows 8, the operating system which has been revamped for working better on touch-screen devices.

The success of iPAd has led to significant changes at Microsoft with the firm designing and selling its own tablet computer, the Surface. This decision was taken by Microsoft after the partners in the hardware business failed to come out with something that was a compelling rival to the iPad.

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