Microsoft is working with manufacturers to produce a line of small
touch-screen devices powered by Windows, apparently intended to compete
with tablets like the iPad Mini and Amazon Kindle Fire.
Microsoft's chief financial officer, told investors and analysts on a
conference call Thursday that the new devices will be available in
coming months at competitive prices.
Microsoft Corp. is struggling
to extend its software into smartphones and tablets as consumers are
turning away from PCs, the foundation of its empire. Over the winter, it
launched two larger tablets under the Surface brand. And in October,
the company took a large stake in Barnes & Noble's digital unit,
which sells a line of entertainment-oriented tablets under the Nook
Microsoft reported financial results for its latest quarter
Thursday, showing a deep - but largely expected - impact from the
slowdown in global PC sales. Investors seemed to be expecting worse
after some recent dismal reports on the PC slump.
Outside the Windows division, Microsoft posted solid results from its Office, software tools and Xbox divisions.
if the company has a lot of challenges, "there's a lot of good things
going on at Microsoft," said Colin Gillis, an analyst at BGC Partners.
The company's shares rose 81 cents, or 2.8 percent, to $29.60 in extended trading, after the release of the report.
income was $6.1 billion, or 72 cents per share, for the fiscal third
quarter, which ended in March. That was up 18 percent from $5.1 billion,
or 60 cents per share, a year ago, and beat the forecast of analysts
polled by FactSet, at 68 cents. However, analysts have trimmed their
forecasts quickly in the last few weeks - a month ago, they were
expecting Microsoft to post 77 cents in earnings.
research firm IDC said PC sales fell 14 percent in the quarter, a
record. It blamed, Microsoft's new Windows 8, which makes a
clean break with the look and workings of old Windows in order to work
better with touch screens. Buyers seem daunted by the new interface, IDC
Klein said that an updated version of Windows 8 to be
released later this year and code-named "Blue," will be in part a
response to "customer feedback." Many complaints have focused on the
lack of a Start button for those who prefer the older "Desktop"
environment, which is hidden behind the new tile-based interface. Klein
didn't offer details.
Revenue was $20.5 billion, up 18 percent from a year ago and matching analyst forecasts.
earnings and revenue were skewed by software accounting practices.
Microsoft offered a $15 upgrade to Windows 8 for Windows 7 PCs purchased
June 2 or later. It wasn't able to start recognizing the full value of
the software licenses until these offers were redeemed or expired. In
the latest quarter, Microsoft was able to recognize $1.1 billion of such
deferred Windows revenue, greatly boosting the overall figure.
out the deferred revenue, overall revenue rose 8 percent, and revenue
in the Windows division was flat with a year ago. Even if consumers
aren't buying many Windows 8 PCs, businesses are still upgrading from
Windows XP to Windows 7 at a rapid clip.
Stripping out deferred
revenue and the effect of a $733 million fine levied by the European
Commission, Microsoft earned 65 cents per share, up 8 percent from a
At the company's largest division, Business, revenue
rose 8 percent from a year ago to $6.3 billion. The increase was 5
percent adjusting for upgrade offers for the new Office suite.
also said CFO Klein is leaving at the end of the fiscal year, in June.
He has been in his current role for four years and at the company for 11
years. The company plans to name a new CFO from its finance team in the
next few weeks.