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Microsoft’s earnings decline

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

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.

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Geoffrey Howe dies, aged 88

Howe was Margaret Thatcher's longest serving Cabinet minister – and the man credited with precipitating her downfall.

The former Conservative chancellor Lord Howe, a key figure in the Thatcher government, has died of a suspected heart attack, his family has said. He was 88.

Geoffrey Howe was the longest-serving member of Margaret Thatcher's Cabinet, playing a key role in both her government and her downfall. Born in Port Talbot in 1926, he began his career as a lawyer, and was first elected to parliament in 1964, but lost his seat just 18 months later.

Returning as MP for Reigate in the Conservative election victory of 1970, he served in the government of Edward Heath, first as Solicitor General for England & Wales, then as a Minister of State for Trade. When Margaret Thatcher became opposition leader in 1975, she named Howe as her shadow chancellor.

He retained this brief when the party returned to government in 1979. In the controversial budget of 1981, he outlined a radical monetarist programme, abandoning then-mainstream economic thinking by attempting to rapidly tackle the deficit at a time of recession and unemployment. Following the 1983 election, he was appointed as foreign secretary, in which post he negotiated the return of Hong Kong to China.

In 1989, Thatcher demoted Howe to the position of leader of the house and deputy prime minister. And on 1 November 1990, following disagreements over Britain's relationship with Europe, he resigned from the Cabinet altogether. 

Twelve days later, in a powerful speech explaining his resignation, he attacked the prime minister's attitude to Brussels, and called on his former colleagues to "consider their own response to the tragic conflict of loyalties with which I have myself wrestled for perhaps too long".

Labour Chancellor Denis Healey once described an attack from Howe as "like being savaged by a dead sheep" - but his resignation speech is widely credited for triggering the process that led to Thatcher's downfall. Nine days later, her premiership was over.

Howe retired from the Commons in 1992, and was made a life peer as Baron Howe of Aberavon. He later said that his resignation speech "was not intended as a challenge, it was intended as a way of summarising the importance of Europe". 

Nonetheless, he added: "I am sure that, without [Thatcher's] resignation, we would not have won the 1992 election... If there had been a Labour government from 1992 onwards, New Labour would never have been born."

Jonn Elledge is the editor of the New Statesman's sister site CityMetric. He is on Twitter, far too much, as @JonnElledge.