Microsoft’s earnings decline

Launch of new version of Surface to fuel optimism for first-quarter.

New Statesman
Microsoft's surface tablet. Credit: Getty Images.

Microsoft has reported fall in fourth-quarter earnings primarily due to rise in marketing and sales costs and the weak penetration of its Windows 8 operating system in the PC market.

Net income fell by 4 per cent to $6.4bn, while pro-forma earnings per share fell to 81 cents, a year-over-year decline of 3 cents.

The company’s Windows PC division posted an underlying 11 per cent increase in revenues for the fourth-quarter, while business division sales declined. Meanwhile, Windows sales grew by 24 per cent to $5.88bn.

“We all collectively learnt a lot, there are a lot of things we’re working on with our partners,” Peter Klein, chief financial officer of Microsoft, said of the reception to new Windows 8 machines.

“The adjustments were meant to ensure that consumers were being offered “the right mix of devices” with “more varied price points”, Klein added.

The emergence of new hybrid machines that feature benefits of both PC and tablets in the market has slowed down adoption of Windows 8 operating system.

Microsoft, which did not reveal sales numbers of its much hyped Surface, is planning to launch a second version in February 2012. In addition, the company hinted to reduce prices of its upcoming Windows PCs and tablets.

Shares of the company fell by 2 per cent in after-market trading.