Microsoft's recent Surface price cut has left it with a $900m (£591bn) hole in its balance sheet as the vendor missed Wall Street profit expectations for its fourth-quarter sales.
Last week, the vendor announced a significant cut in the price of its RT devices – between $150 and $349 per device. This, as well as inventory adjustments for parts and accessories, meant Microsoft recorded a $900m charge on its balance sheet.
The software giant's chief financial officer Amy Hood insisted that despite the impact on profits, the price cut will accelerate the tablet's long-term success.
For the three months to 30 June, Microsoft's revenue jumped 10 per cent to $19.9bn, but fell short of analyst expectations of $20.7bn. Its net income reached $5bn for Q4, a significant boost compared to last year when it posted a $492m loss due to goodwill impairment related to the write-off of its 2007 aQuantive buyout.
For the full year, Microsoft's sales grew six per cent to $77.8bn while its net profit jumped 29 per cent to $21.9bn.
Excluding revenue deferral relating to the Windows Upgrade Offer, Microsoft's Windows Division's non-GAAP revenue slumped six per cent annually in Q4 and one per cent for the full year.
Hood said that she knows Microsoft has to do better, but that transition to a new OS – especially with the huge amount of Windows users – takes time. Microsoft claims increased commercial sales in the division were largely offset by the impact on revenue of a decline in the x86 PC market.
Microsoft's Business Division's sales for the year grew three per cent to $24.7bn, while for Q4 its revenue jumped 14 per cent to $7.2bn. The boost was driven by companies adding both seats and products to their long-term agreements, the vendor claims.
In its Server and Tools (STB) arm, full-year sales hiked nine per cent annually to $20.3bn while the division's final-quarter revenue also rose nine per cent, to $5.5bn. Microsoft said sales of premium versions of Windows Server and SQL Server drove the STB boost.
Across its Online Services Division (OSD), sales for FY13 jumped 12 per cent to $3.2bn while revenue in Q4 grew nine per cent to $804m – both boosted by a growth in search advertising revenue.
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