ZOMG! Harness up your Schadenfreude, and let it run wild and free, because Microsoft has posted its first ever loss! Isn’t that awesome! Finally, Microsoft has some comeuppance, and…wait, what? It’s just because of a one-time charge, and the company actually posted record revenue and is more or less doing just fine?
In a word, yes.
Microsoft CEO Steve Ballmer Laughs at Red Ink!
Big Redmond reported results for its June quarter, the company’s fourth fiscal quarter. Those results included record quarterly revenue of US$18.06 billion, with a loss of $192 million.
It’s that loss that has grabbed all the headlines, as it is Microsoft’s first-ever loss as a public company. With the company’s image as a plodding dinosaur that has hopelessly lost the war for cool to Google and Apple, many people seem to be jumping at the opportunity to assume that the loss is finally the proof that the company’s heyday is long past.
That may or may not be the case, but this quarterly result won’t be Steve Ballmer’s death knell as Microsoft CEO. While it is the company’s first loss, it was due to a one-time charge—Microsoft wrote off $6.19 billion in so-called good will related to the 2007 purchase of aQuantive.
aQuantive was an advertising company that Big Redmond bought for $6.3 billion back when there was a vague chance that Google wasn’t going to WTFPWN the online advertising market. It turns out that an aQuantive-armed Microsoft wasn’t the combination to keep Google from doing just that, and the charge was a necessary step in adjusting the value of those assets today.
As it is, Microsoft is making money hand-over-first. In addition to the $6.2 billion charge mentioned above, Microsoft also deferred $540 million of revenue related to the company’s Windows Upgrade Offer. Add those numbers and some other minor charges, and Microsoft’s non-GAAP earnings clocked in at $6.94 billion, 12 percent higher than the $6.2 billion in earnings in the year-ago quarter.
The company also reported record revenue for fiscal 2012 of $73.72 billion, including earning of $21.76 billion and earnings per share of $2.00.
The write down does call into question Microsoft’s future in online advertising, which could lead to questions of Bing’s relevance and future, but the reality is that Microsoft’s Windows and Office empires are still more than strong enough to make up for the company’s many other weaknesses in search, online advertising, and possibly smartphones, at least in the short term.
Shares in MSFT ended the day higher at $30.665, up $0.215 (+0.71 percent), on strong volume of 46.6 million shares trading hands. Shares were up in after hours trading, too, at $31.40, up $0.735 (+2.40 percent).