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Microsoft stock buoyed despite quarterly profit dip

Microsoft stock buoyed despite quarterly profit dip

Microsoft's share price is up two percent following its latest earnings call, despite a profit dip of nearly seven per cent year-on-year.

Investors have remained bullish following Microsoft's latest financial results, despite a drop in net income of nearly seven per cent and a serious dip in the company's Surface sales.

Released late last night during an earnings call with press, investors and analysts, Microsoft's latest figures reveal an impressive $20.4 billion revenue and a net profit of $5.66 billion for the company's third quarter of the 2014 financial year. Despite facing a small revenue shortfall of 0.4 per cent year-on-year and a drop in net profit of 6.6 per cent over the same period, the figures showed growth in several areas including a 12 per cent boost in the company's Devices and Consumer division revenue by 12 per cent to $8.3 billion.

One lowlight of the call, however, was the performance of Microsoft's Surface division. Its first attempt to break into the PC market with own-brand products, the initial Surface line-up - the Windows RT-based Surface and Windows 8-based Surface Pro - proved extraordinarily difficult to sell into a market tied up by iOS and Android devices, leading to a massive loss for the company. Price cuts followed by the launch of the Surface 2 and Surface Pro 2, both of which address criticisms of their predecessors, help boost sales but with Microsoft refusing to release figures it was not know by how much.

While the company didn't break with tradition and detail how many Surface tablets it has sold over the quarter during the call - despite name-dropping two million Xbox consoles, 1.2 million of which were Xbox One units, having been sold over the same period - it did admit that revenue from Surface tablet sales was a mere $500 million compared to $893 million in the prior quarter. That's a significant dip, even during the traditional post-Christmas slump, but the company was quick to point out that it still sits a comfortable 50 per cent higher than the same period last quarter.

With analysts having predicted roughly even revenue and an even bigger drop in profits, investors appear confident that Microsoft is on-track under new chief executive Satya Nadella. The company's share price rose 2.06 per cent in pre-market trading following the earnings call.

11 Comments

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RichCreedy 25th April 2014, 19:16 Quote
I wouldn't mind betting that if Microsoft had put the surface tablets into distribution, they would have sold better. smaller IT resellers cant get them at the moment without paying normal retail prices, you have to go to retail chains in order to buy them.
Bede 26th April 2014, 03:35 Quote
Pretty certain "bouyed" is not a word.
Cthippo 26th April 2014, 03:54 Quote
Quote:
Originally Posted by Bede
Pretty certain "bouyed" is not a word.

Pretty certain it is. Means to be lifted by something external. Derived from buoy which is a floating aid to navigation which rides up and down on the tide.
Corky42 26th April 2014, 08:55 Quote
Question: In Microsoft's quarterly earnings report it says...
Quote:
Microsoft sold in 2.0 million Xbox console units, including 1.2 million Xbox One consoles.
Emphasis added by me because i wanted to asked what they mean by "sold in"

From what i have read Microsoft is playing with words, as some people are claiming the term “sell in” is used when a manufacturer sells parts into the channel. So are Microsoft reporting what has been shipped to retailers and trying to pass that of as units sold ?
Gareth Halfacree 26th April 2014, 09:11 Quote
Quote:
Originally Posted by Bede
Pretty certain "bouyed" is not a word.
Quote:
Originally Posted by Cthippo
Pretty certain it is. Means to be lifted by something external. Derived from buoy which is a floating aid to navigation which rides up and down on the tide.
No, Bede's right: I typoed. The word is "buoyed," not "bouyed." Fixed, ta!
Quote:
Originally Posted by Corky42
From what i have read Microsoft is playing with words, as some people are claiming the term “sell in” is used when a manufacturer sells parts into the channel. So are Microsoft reporting what has been shipped to retailers and trying to pass that of as units sold ?
They're right: "sell-in" is sales to the channel, "sell-through" is sales to the consumer via the channel. So yes, a big chunk of those consoles may very well be sitting in warehouses and on shop shelves rather than under people's TVs.
rollo 26th April 2014, 14:56 Quote
Think the Xbox one is selling a lot worse than most assumed, Sony has given confirmed unit sales to customers microsoft only given shipped to retail sounds like the surface all over again.

Think the Xbox one like the surface rt is struggling in the face of the competition who this time have launched quicker ( world wide) with much better gamers console ( its a lot more powerful long term that will make a dif) kinnect never was a big thing for the people I knew who owned the orginal 360.
Snips 26th April 2014, 14:56 Quote
I wouldn't be too certain of them sitting in warehouse's. I've seen reports (how in depth I would question) but know people personally who have partex their PS4 for XboxOne's. The main reason has been lack of quality titles. Maybe Microsoft were right to tie up so many exclusives in the long run. I have to add that people I know personally have been die hard Playstation gamers, so I was shocked to hear they had changed.
Corky42 26th April 2014, 15:25 Quote
Even if they were not sitting in warehouses 1.2 million is still way under the amount of PS4's sold approximately
3 million per quarter.

I can't think why anyone would swap a PS4 for a Xbox One, when the PS4 has more games and more exclusives.
http://en.wikipedia.org/wiki/List_of_Xbox_One_games
Quote:
This is a list of Xbox One games currently planned for release either at retail or via download.

There are currently 153 games on this list.

Exclusive = 17
Microsoft exclusive = 9
Console exclusive or timed = 10/3
Multiplatform = 114
Playable = 40 available to purchase (9 of these are exclusive to Xbox One)
http://en.wikipedia.org/wiki/List_of_PlayStation_4_games
Quote:
This is a list of retail and digital PS4 games planned for release. Multiple titles are currently in development. Some publishers have indicated that they are developing titles for the PS4 without explicitly stating what they will be, which are not included in this list.[1] Sony says they have "every" significant third-party developer supporting the PS4.[2]

There are currently 217 games on this list (15 of which have been confirmed as free-to-play).

Exclusive = 27 (1 of these are free-to-play)
Sony Exclusive = 18
Console exclusive and/or timed = 57 (8 of these are free-to-play)
Multiplatform = 115 (1 of these is free-to-play)
Playable = 65 available to purchase (10 of these are exclusive to PS4)
rollo 26th April 2014, 15:35 Quote
1.2million is still 1.8million less than the last figures Sony give at the start of march and that was a sold to customer number. Been rumours before that Microsoft wanted to sell the Xbox brand. Most fans were saying they had sold 3-4 million Xbox ones in this quater before this was posted. In counter posts to sonys actual sales figures.

As I said before they did a similar thing with the Surface it won't happen this time but it's not shifting as fast as they wanted that is a known fact.

Microsoft need to improve distribution the fact japan one of the biggest markets for video games still does not have a launch for the console is a massive failure on microsofts part.

Don't own either console and won't be getting either.
Snips 26th April 2014, 22:04 Quote
The word that may have taken more interest in was "Quality" exclusives. I'm only stating what I have witnessed and seen elsewhere.

Also, I wouldn't read too much into the lack of Microsoft Xbox launches in Japan, it's always been a Sony/Nintendo/Sega huge fanbase and has never really deviated from it.
rollo 27th April 2014, 03:38 Quote
Xbox 360 still sold 10% of all its sales in Asia market so it can not be all that bad. Either way you look at it its still struggling to make the same impact as the xbox 360 did.

for a few main reasons 2 of those would be price and lack of 1 year + sales lead on the next console to launch. Ps3 was more expensive and late this time around the PS4 is cheaper and launched at the same time and has the more powerful hardware.

Niether console has a great exclusive yet ( Not seen alot due that id say is must buy either) Titanfall was pretty average another fps game ( Its a pretty average pc game for the record) and thats the main exclusive launched by either side so far. ( Last great console game was GTA 5 and before that The Last of Us )

Lack of tv features outside of the USA with no time frame for if or when these features will reach international markets ( My guess is never )

That and the whole we want to be the media box of your living room well some things for that to really happen. TV DVR is the biggest by a good way as it stands. TV support outside of USA is next.

Port all games to PC and id be happy though.
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