First Quarterly Loss for Microsoft Reported

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For the first time in the 26 years as a public company, Microsoft announced that it encountered a quarterly loss. The company said that its online ad business is a bust as it gets ready for a major product update. Microsoft said just two weeks ago that the company was going to be hit with a $6.2 billion charge in the quarter from April to June as a result of its purchase of aQuantive back in 2007. aQuantive is an online ad company that was supposed to help Microsoft compete with Google Inc. Four percent of Microsoft’s annual revenue comes from its online ad section.

In the fiscal fourth quarter, Microsoft experienced a $492 million loss, which is 6 cents per share. When those numbers are compared with the numbers from the same time last year, Microsoft had earnings of $5.9 billion, which is 69 cents per share. The company’s revenue increased by just 4 percent to $18.06 billion.

  

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The company is now counting on the anticipated release of its Windows 8 on October 26 of this year. Windows 8 marks the most in-depth redesign of its operating system since 1995. The new version will have a brand new look and will be operable on tablet computers. Microsoft will also launch its own tablet, the Surface, in conjunction with Windows 8. The Office suite will also be released with some changes as spreadsheet, email and word processing will all be bundled together.

The revenue in the Windows division of the company has declined for five of the previous seven quarters. In the last quarter, revenue in the Windows division fell by 13 percent to $4.1 billion. Consumers who purchase specific computers running on Windows 7 will have the chance to make a $15 upgrade to Windows 8 during a certain time frame.

Microsoft hit the public in March of 1986 and the charge of $6.2 billion is non-cash adjustment. The quarter that ended recently for Microsoft is the last one for the company’s 2012 fiscal year. When Microsoft bought aQuantive in 2007 it was the company’s most expensive purchased to date. Since the initial purchase, the online ad section posted continuous losses amounting to over $9 billion from the time of the purchase. Google has increased its lead over Microsoft and a major reason has been its purchase of DoubleClick, which came just eight months after aQuantive was purchased by Microsoft. The purchase for DoubleClick cost Google $3.2 billion. The market share for the Bing search engine from Microsoft has dropped to 26 percent from 27 percent last year. The market share also includes searches using Yahoo Inc. since Yahoo uses the technology Bing uses.