900 million hit due to millions of unsold Surface RT tablets
Microsoft (MSFT) has announced its fourth quarter (Q2 calendar) and full year earnings, and the news isn fantastic. While its enterprise offerings continue to do well (the Server and Tools division grew 9% this year), the company continues to be hampered by the shrinking PC market the Windows division, despite the release of Windows 8, saw its profits drop 18% year over year. For the complete financial year, Microsoft revenue was up 6% to $77.849 billion, from $73.723 billion but, if we remove last year massive $6.2 billion write down of aQuantive, Microsoft revenue (and profits) are essentially flat or slightly down. More importantly, though, Microsoft financial report also shows that it took a $900 million charge for RT inventory adjustments. Dividing that by the recent $150 price oakley outlet cut suggests that Microsoft could be sitting on as many as six million unsold Surface RTs.
If Microsoft really has six million Surface RT tablets lying around, it be one of the most gloriously magnificent misjudgments in technological history. Early reports from the supply chain suggested that Microsoft had ordered around three million ARM powered tablets, and industry analysts oakley outlet estimated that between 1 and 1.5 million of them had been sold. There is a possibility that the $900 million charge also includes Surface accessories, but we still looking at a huge number of stockpiled Surface RTs probably between five and six million. Accounting for the ones that have already sold, this means that Microsoft originally expected to sell up to seven million Surface RTs. A highfalutin target for a sluggish tablet with limited functionality, especially when there are Android and iOS tablets in the same price range.
With a new Surface RT tablet expected alongside Windows 8.1 in the fall, it be interesting to see how much of its existing stockpile it can shift. During the earnings call, Microsoft CFO Amy Hood said, believe this price decrease will accelerate surface RT adoption and position us for better success. $350 the Surface RT is certainly more tempting than it was before, but I still don know if I would recommend it over an iPad Mini or Nexus 10. We wouldn be surprised if, come Microsoft Q4 calendar earnings, there another huge charge for unsold inventory.
Zooming out, the financial results from Microsoft other divisions are a mixed bag. The Online Services division (Bing) continues to make a loss, but this year it made its smallest loss ever (just $1.28 billion). Entertainment and Devices, which includes the Xbox 360 and Windows Phone, saw full year revenue growth of 6% to $10.165 billion, and a doubling of profits to $848 million this year. Microsoft Business division (Office, SharePoint, Lync) had a fantastic quarter (revenue up 14%; profits up 18%), but fairly flat over the full year. Consumer revenues dropped precipitously (27%) due to the tardiness of the PC market, but this was buoyed up by strong business revenues.
CFO Amy Hood said, in response to Microsoft generally weak earnings, “We know we have to do better and this is one reason we made the strategic and organizational changes last week. We are confident we are moving in the right direction. forward, Microsoft issued guidance saying that next quarter will probably be much of the same: Windows will continue to struggle, Entertainment and Devices will decline slightly (until the release of the Xbox One presumably), and Server and Tools and Business will continue to grow steadily. Online Services will grow by double digits, but that not saying much.
Now read:The demise of Microsoft’s monopoly and the PC market, by the numbers
Tagged InI have never had the to play around with one of these tablets. As a matter of fact, I don think I seen anybody with one of these, nor do I know anybody that has one. After having been annoyed with Win 8, I don think I want anything to do with this tablet if it is the same as, or nearly oakley outlet the same, as the desktop OS. I considered myself a Windows fanboy for years but all these recent so called innovations are pushing me away and making me consider a Mac next time around. But then again I not a PC gamer and I don due a lot of multi tasking activities so I don really need a large desktop/laptop when I can get my work done with a tablet the huge decrease in desktop sales.
I don want a Tablet OS on my Desktop, and I don want a Desktop OS on my Tablet.
Microsoft shouldn have get rid of the Start Menu, they should have give their users freedom to chose between Start Menu and the new Start Screen.
Microsoft shouldn have relegated the Desktop to second class citizen, forcing a Tablet UI (Metro) to everybody.
And we better don start talking about everything they have done wrong with Windows on ARM (locked boot, locked desktop, locked apps, liked Windows because as a developer it was synonym of freedom, but look likes Microsoft has changed his mind.
Serves them right for making something so ridiculously poor and expensive. They been so incredibly bad you wonder how can they pay people to make analysis on it when the average consumer from afar can tell the RT is just plain awful at that kind of price tag. I mean when you can get an iPad mini or Nexus 7 for nearly 200 cheaper than an RT why would you bother with the RT? I don even personally like tablets but the strategy by Microsoft was amateurish at best. MS deserve what they get. Resting on laurels and not delivering rarely gets punish if you have a monopoly status but its safe to say that, that is no longer the case with the likes of Apple and Chrome (even in some cases Linux but for limitations on hardware) encroaching on their turf.
i have absolutely no sympathy for Microshaft, they have systematically destroyed their core product lines, screwed their loyal user base. as a company that was Thee number one computer software company have literally flushed themselves down the toilet, it seems they became too paranoid with the consumer orientated mobile computer/os micropayment platforms by competitors such as apple and android, they abandoned their own perfectly good and unsinkable ship, in a desperate move to copy the competition.
The reason i have no sympathy is that i and many others for the past few years have made the same comments and predictions on this happening all along. windows xp was their holy grail, windows 7 was the last usable os, windows 8 has killed Microso oakley outlet ft and put desktop pc on life support. (to my bitter disappointment)
Xbox will be the final nail in Microsofts coffin, they killed that already with the drm nonsense, regardless of where they go from here, gamers will go ps4 because they know microshaft can re enable drm online only crap at any point with an update. and screw their customer base, the damage has already been done