Redmond’s overall revenue for the quarter was a massive $19.9 billion. Yet analysts had anticipated just under a billion more. Net income was $6.07 billion. The company also took a whopping $900 million charge associated with disappointing Surface RT sales — and related pricing adjustments.
The company’s quarterly revenues were clearly affected by “by the decline in the PC market,” said Microsoft CFO Amy Hood.
Windows 8 has so far seen only tepid adoption. According to Chitika only 5 percent of Windows-related traffic is coming from PCs running Windows 8. Microsoft hopes that 8.1 will rehabilitate the system’s reputation and drive more consumer and enterprise PC sales.
Below are the major highlights of the earnings release today:
- Windows division — $4.6 billion in revenue, down 15 percent due to weak consumer PC demand and Surface RT adjustments
- Server & tools — $5 billion up 9 percent on enterprise demand strength
- Business division (Office) — $6.1 billion, up 7 percent though consumer revenue was down 27 percent
- Online services (Bing + ads) — $0.83 billion, with online advertising up 11 percent
- Entertainment & devices (Windows Phone, XBox, Skype) — $2.15 billion down from $3.8 billion the previous quarter
These business units are being reorganized into a new Microsoft organization, which includes the units below. The following is verbatim from the recent Steve Ballmer memo:
- Operating Systems Engineering Group. Terry Myerson will lead this group, and it will span all our OS work for console, to mobile device, to PC, to back-end systems. The core cloud services for the operating system will be in this group.
- Devices and Studios Engineering Group. Julie Larson-Green will lead this group and will have all hardware development and supply chain from the smallest to the largest devices we build. Julie will also take responsibility for our studios experiences including all games, music, video and other entertainment.
- Applications and Services Engineering Group. Qi Lu will lead broad applications and services core technologies in productivity, communication, search and other information categories.
- Cloud and Enterprise Engineering Group. Satya Nadella will lead development of our back-end technologies like datacenter, database and our specific technologies for enterprise IT scenarios and development tools. He will lead datacenter development, construction and operation.
Microsoft’s two largest revenue sources have historically been Windows OS and Office. But of those products are under pressure from the decline in consumer PC sales. And with the exceptions of Servers & Tools and the Business Division, projected revenues for next quarter are somewhat lower than this quarter.