Microsoft Shares Nosedive After Earnings Report

Dennis Faas's picture

Microsoft's quarterly earnings report has resulted in the company's shares plummeting by 10 per cent. Investors appear to have been spooked by fourth quarter results that revealed a $900 million loss on the company's Surface tablet computer.

Last week Microsoft slashed the price of its Surface RT tablet by $150, dropping that price from $499 to $349. Recent reports have suggested the firm has sold only a tiny portion of the devices it expected to sell, forcing it to take a loss in order to clear out existing stock.

For Microsoft, Mobile Market A Tough Nut to Crack

The stock plunge is the result of investors becoming increasingly alarmed with Microsoft's inability to successfully move beyond the PC platform and into the growing mobile market.

The PC market, which is so critical to Microsoft profits, is in free-fall. Recently, research firm IDC reduced its forecast for 2014 global PC shipments to just 318 million units -- that's just over half the number of units sold three years ago.

Microsoft's report revealed that revenue from Windows PC sales had declined 6 per cent.

That's why it's so important for Microsoft to move beyond laptops and desktops into the mobile market. But consumers have shown minimal interest in the Surface or smartphones running Microsoft's mobile operating system.

Although Nokia, which uses Microsoft's Windows Phone platform, set sales records last quarter, few of those sales came in North America.

There, consumers have shown little desire for phones running platforms other than iOS and Android. Sales of Nokia's Windows Phones were just 500,000 for the entire fourth quarter. (Source:

"We Need to Do Better," Microsoft CFO Says

For its part, Microsoft says it's not going anywhere and won't give up on consumers or its mobile products.

"We know we need to do better," noted Microsoft chief financial officer, Amy Hood. (Source:

For Microsoft supporters, there's still much hope. The firm also reported $5 billion in quarterly profits and $20 billion in quarterly revenue.

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