Microsoft has posted its first loss since becoming a public company in 1986, as the company deferred revenues and wrote down online assets in the lead in to its Windows 8 launch in October.
The quarterly net loss of $492m compares with a net profit of $5.9bn in the same period last year. Despite this loss, the company reported record sales of $18.1bn, up 4% on the year prior.
The financial results include the previously announced charge of $6.2bn for the impairment of goodwill on its online division, which includes the Bing search engine business and MSN Web portal.
This sits alongside the deferral of $540 million of revenue from the Windows Division as part of its Windows 7 to Windows 8 Upgrade Offer.
Microsoft said the market for personal computers was flat in the fourth quarter, with sales of business PCs up 1% and consumer PCs down 2%, which broadly reflects market consensus.
Microsoft CEO Steve Ballmer has described the launch of Windows 8 as the biggest for the company since Windows 95, and the company has bet the house on a positive outcome.
Research already suggests that many consumers are holding off on purchasing any new Windows products until the new operating system launches.
Over the past ten years Microsoft under Ballmer has missed out on the mobile and tablet trends, and internet search and advertising – where much of the industry’s income has come from. Its share price has reflected that impact, and remains similar to its 2001 price.
The company is counting on the tablet based Windows 8 to redress the balance, and bring it back into all these markets.
Despite this, Forbes Magazine called Ballmer ‘the worst CEO in America’, and Vanity Fair recently ran a high-profile feature about Microsoft’s ‘Lost Decade’.
Microsoft’s entrance into the hardware market with the Surface tablet and its Windows Phone 8 announcements have not gone down well. The company also announced a touch screen focused redesign of its Office Suite, with Office 13, earlier this week.
In the company’s Office Division, operating income rose 9%. While the entertainment division, headlined by the Xbox consoles, again were money-losers. Like Windows, the Xbox 360 is outdated and waiting for the new console – expected to launch in 2013.
