Microsoft shares down more than 11% on earnings report

microsoftlogoInvestors sent Microsoft’s share price down more than 11 percent, to about $31.40, in trading this morning following the company’s rocky earnings report yesterday, which included a $900 million charge on weak sales of the company’s Surface RT tablet.

Analysts including Raymond James and Cowen downgraded Microsoft’s shares this morning, following the earnings report.

The numbers reflected ongoing weakness in Microsoft’s Windows business. The company reported earnings of 59 cents a share, when including the 7 cent charge for the Surface RT. Adjusting for that charge, the company’s earnings would have been 66 cents per share — still significantly lower than the 75 cents that Wall Street analysts had been expecting in advance of the report.

Amy Hood, the company’s new chief financial officer, asked investors for patience on a conference call yesterday.

“This quarter our Windows business declined as the device market continued to evolve beyond the traditional PC,” she said. “We are working to transition the business into this modern era of computing taking advantage of the new scenarios enabled our Windows 8. As we said before, given the complexity of the ecosystem, this journey will take time, but we continue to make incremental progress.”

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  • Kosh

    And so it begins….

    • Guest

      I can hear MS apologists already. “Adjusted for the recent decline in PC’s, 11% down in share value is basically a gain.”

  • Patrick Husting

    Amazing as I had a field rep tell me the other day, before earnings, that they crushed sales numbers in the 4th quarter…

    • guest

      And you trust the field sales reps??!?! Bwaa, haaa, haaa, haaa!

      • Patrick Husting

        Yeah… Sales people for you. :o)

    • Guest

      A field rep would have likely been speaking for his/her district or at best their region, not the world. And they typically wouldn’t have any insight at all into overall OEM sales, which is where much of the weakness came from. Billings in business and server was quite solid overall. So it’s quite possible a rep or a region crushed their numbers. But that != the entire company doing so.

      • guest

        However, therein lies part of the problem, if one sales org feels great having crushed their forecast, with no awareness of how the rest of the sales org is doing meeting their #’s.

        • Guest

          Why is that a problem?

  • guest

    Is it just me, or does anyone else STILL read Surface RT as Surface Re-Tweet. You’d think for a bunch of techies they would have known to avoid that for simplicity’s sake.

    • Guest

      Now that you mention it, silently I usually read it as Surface RTard.

  • guest

    Knew I should have sold at $35, shit.

    • guest

      You’d have to have owned some in order to sell it.

      • guest

        sadly, I own plenty. Today cost me >$10k

        • guest

          Sell and buy put options. There’s plenty more downside to come.

  • bizdevguy

    And why is the guy who got them into this mess the guy to get them out? Why?
    The reorg has a central flaw: It depends on a culture of trust and collaboration. Tens of thousands of people hired and incented for decades to not collaborate aren’t going to suddenly start (effectively) collaborating because the org and the incentives changed. Cultures just don’t work like that.
    Microsoft’s culture is likely incapable of both a) producing products that will keep them in their former market position over time and b) changing enough, and quickly enough, to change a).
    Well, there is ONE change they could make that might spur that along, but if it hasn’t been made by now…..

    • clibou

      Spot on. Even if the BIG CAT has changed his spots. There’s a credibility gap driving change into the culture. At the ISV level the GE style divisional culture had translated into dev tools still optimized for building vertical businesses pegged to Windows. When for the last 5 years nearly startup is built for horizontal businesses pegged to Internet. Just try building a low latency search box like Bing has using the MSDN stack. ONE change double down on Azure by buying SFDC and installing Marc Benioff as CEO to transition the culture.

  • Blah

    I should have put this here rather than the prior post about the numbers.

    The interesting question is what is Microsoft solving for. It would be easier to understand if they acknowledged they are largely an enterprise technology company focused on growing their cloud business with a good games business and they were driving for profitability. But they are not driving for profitability increases. If they were, the reorg would have had at least some restructuring on the cost side.
    Microsoft seems to be looking for “relevance” which they have not had outside of the enterprise space in a decade. Their enterprise cloud business is a great set of product offerings that are very appealing to mid-sized, large and very large enterprises and look to be doing well. Wastes of time and money like Surface and Windows Phone, plus Bing, show how good they are at getting to relevance .

  • nobody

    Start process = new Process();

    // Configure the process using the new properties.
    process.StartInfo.FileName = “YouAreFired-Ballmer.exe”;
    process.StartInfo.Arguments = “10 Years + Horrendous Results = Is obvious YOU SUCK”;
    process.StartInfo.WindowStyle = ProcessWindowStyle.Maximized;
    process.Start(ASAP);
    process.WaitForExit();

    // Waits here for the process to exit

  • FabbJabb

    I dont think Jack Smack is gonna be Happy about that.

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