Microsoft is having a hard time selling its Surface RT tablets. The computer giant announced Thursday that it had to take a $900-million charge against earnings because of what it described as "inventory adjustment" for the device.
Microsoft recently cut the price of its Surface RT models by $150 this month and gave away thousands of free Surface Pro tablets to attendees at its developers conference in June.
The write-down for expected losses on the Surface RT tablet amounted to $900 million.
The company today announced a nearly $21.9-billion profit for the year. Quarterly revenue was $19.90 billion for the quarter ended June 30, 2013. Operating income, net income, and diluted earnings per share for the quarter were $6.07 billion, $4.97 billion, and $0.59 per share.
"While our fourth quarter results were impacted by the decline in the PC market, we continue to see strong demand for our enterprise and cloud offerings, resulting in a record unearned revenue balance this quarter. We also saw increasing consumer demand for services like Office 365, Outlook.com, Skype, and Xbox LIVE," said Amy Hood, chief financial officer at Microsoft. "While we have work ahead of us, we are making the focused investments needed to deliver on long-term growth opportunities like cloud services."
"We are working hard to deliver compelling new devices and high value experiences from Microsoft and our partners in the coming months, including new Windows 8.1 tablets and PCs," said Steve Ballmer, chief executive officer at Microsoft. "Our new products and the strategic realignment we announced last week position us well for long-term success, as we focus our energy and resources on creating a family of devices and services for individuals and businesses that empower people around the globe at home, at work and on the go, for the activities they value the most."
"Our new products and the strategic realignment we announced last week position us well for long-term success, as we focus our energy and resources on creating a family of devices and services for individuals and businesses that empower people around the globe at home, at work and on the go, for the activities they value the most," the company said in a statement.
Microsoft will have to do a better job with the Surface, as the company said it would focus more on products like the tablet and other services going forward, rather than just relying on its Windows software.
Microsoft Business Division revenue grew 14% for the fourth quarter and 3% for the full year.
Server & Tools revenue grew 9% for the fourth quarter and 9% for the full year, driven by double-digit percentage revenue growth in SQL Server and System Center.
Windows Division revenue grew 6% for the fourth quarter and 5% for the full year.
Online Services Division revenue grew 9% for the fourth quarter and 12% for the full year, driven by an increase in revenue per search and volume. Bing organic U.S. search market share was 17.9% for the month of June 2013, up 230 basis points from the prior year period.
Entertainment and Devices Division grew 8% for the fourth quarter and 6% for the full year. During the quarter, transactional revenue within Xbox LIVE grew nearly 20%, and Microsoft unveiled its next-generation gaming and entertainment console, Xbox One.
Microsoft's Windows 8 has sold more than 100 million licenses since launching in October. The company is also releasing a revamped version of the system called Windows 8.1 later this year.