SEATTLE – Microsoft Corp. took an unexpected write-down of $900 million on its inventory of unsold Surface tablets, further reducing earnings already hurt by shrinking demand for personal computers running Windows.
Fourth-quarter profit was $4.97 billion, or 66 cents a share, excluding a 7-cent charge related to the inventory adjustment, Redmond, Wash.-based Microsoft said Thursday. Sales rose 10 percent to $19.9 billion. Analysts had predicted profit of 75 cents a share on $20.7 billion in revenue, according to the average of estimates compiled by Bloomberg.
Chief Executive Steve Ballmer released Surface, along with a new version of Windows, in October to stem the loss of consumers to mobile devices that offer many of the same features as laptops and desktops. The new products have failed to ignite demand. PC shipments fell 11 percent last quarter, according to IDC.
"This is because of the triple whammy of the economy, tablets and Windows 8," said Frank Gillett, an analyst at Forrester Research Inc. in Cambridge, Mass.
Surface, Microsoft's first-ever computer, is selling poorly. Just 900,000 units were shipped in the December and March quarters, according to IDC. Microsoft cut the price on one version, Surface RT, this week.
Microsoft shares fell as much as 6.4 percent in extended trading. The shares declined less than 1 percent to $35.44 at the close in New York. The stock is up 33 percent this year, compared with a 18 percent increase in the Standard & Poor's 500 index.
Microsoft Chief Financial Officer Amy Hood said consumer PC shipments dropped 20 percent in the quarter. That also hurt sales of Office software, she said.
"We know we have to do better, particularly on mobile devices, and so that's a big reason we made the strategic and organizational changes we made last week," she said in an interview.
