Microsoft “looks good” as it posts first loss

Microsoft has posted its first ever quarterly loss after writing down its online unit, but sales held steady ahead of Windows 8.

The company announced earlier this month it would take a $6.2bn charge over aQuantive, which it bought in 2007. Excluding the multibillion-dollar write-down, and factoring in some deferred Windows revenue, Microsoft actually exceeded expectations.

“It looks good, given the dicey economic environment and the weakness we already know about in PCs,” said Brendan Barnicle, an analyst at Pacific Crest Securities.

It looks good, given the dicey economic environment and the weakness we already know about in PCs

After several years of stumbling behind Apple and Google, some expectation is building that Microsoft can re-establish itself as a tech leader with its new, touch-friendly Windows 8 system, and an accompanying tablet of its own design.

“There’s a lot of anticipation for the next Microsoft products. They are regaining credibility with enterprises,” said Trip Chowdhry, an analyst at Global Equities Research.

Alongside Windows 8 and its new Surface tablet, Microsoft is set to release new phone software and a new web-oriented version of its highly profitable Office suite of applications over the next 12 months.

These, and other products, “will drive our business forward and provide unprecedented opportunity to our customers and partners,” said chief executive Steve Ballmer, in a statement.

First net loss

Microsoft reported a net loss of $492 million for its fiscal fourth quarter, compared with a profit of $5.87 billion, or 69 cents per share, in the year-ago quarter.

The loss was expected after Microsoft said earlier this month that it would take a $6.2 billion write-down for the value of its online unit after an ill-fated acquisition of a digital advertising agency five years ago.

Microsoft has not suffered a quarterly loss since going public in 1986.

Revenue rose 4% to $18 billion, slightly below analysts’ estimates, helped by strong growth in its Office unit, but dampened by slowing computer sales. Global PC sales, which have been stagnant for the last two years, fell 0.1% last quarter, according to tech research firms Gartner and IDC.

Microsoft deferred $540 million of Windows revenue in the quarter due to an upgrade discount it is offering customers who buy machines running Windows 7 before the launch of Windows 8 in October.

Excluding the deferred revenue, the company’s flagship Windows unit posted only a 1% drop in sales, which was better than some analysts had expected in the uncertain economy and the run-up to the launch of Windows 8.

“PC sales could have been much worse,” said Mark Moerdler, senior research analyst at Sanford C. Bernstein. “Usually people hold off buying new PCs when there is new software coming out.”

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