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Sluggish PC sales drive down Microsoft’s Q4 profit

Microsoft Q4 earnings dropped during the fourth quarter as slump in PC sales impacted its Windows business in addition to an unexpected $900m charge for its Surface RT inventory adjustments.

During the quarter ended 30 June 2013, the company reported 10% rise in its revenues to $19.9bn, while its operating income, net income reached $6.07bn and $4.97bn respectively.

Microsoft Business Division revenue grew 14% for the fourth quarter, Server & Tools revenue grew 9% , Windows Division revenue grew 6%, Online Services Division revenue grew 9% while Entertainment and Devices Division grew 8%.

Microsoft chief financial officer Amy Hood said that while the company’s fourth quarter results were impacted by the decline in the PC market, there is a continuous demand for its enterprise and cloud offerings, resulting in a record unearned revenue balance during the quarter.

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"We also saw increasing consumer demand for services like Office 365, Outlook.com, Skype, and Xbox LIVE," Hood said.

"While we have work ahead of us, we are making the focused investments needed to deliver on long-term growth opportunities like cloud services."

Whilst drastically reducing prices and expanding distribution of the model to entice buyers, Microsoft was not able to boost sales of Surface tablets which were launched to rival Apple’s iPad.

Microsoft chief executive officer Steve Ballmer said that the company is working hard to deliver compelling new devices and high value experiences from Microsoft and its partners in the coming months, including new Windows 8.1 tablets and PCs.

"Our new products and the strategic realignment we announced last week position us well for long-term success, as we focus our energy and resources on creating a family of devices and services for individuals and businesses that empower people around the globe at home, at work and on the go, for the activities they value the most," Ballmer said.

Microsoft also carried out what is said to be the company’s biggest management overhaul in five years, which creates a single devices division for the first time, signifying that it would double its thus far failed attempts into hardware.
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CBR Staff Writer

CBR Online legacy content.