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Microsoft Cloud: Article

Microsoft Misses Estimates

Nearly all its business units missed internal projections and its share price dropped 6.3% after-hours to $35.44

Microsoft's little adventure into tablet land has cost it a $900 million charge to cover its slashing prices on its hard-to-move ARM-based Surface RT widgets earlier this week by as much as 30%.

But that was only part of its fiscal Q4 story of missed revenue and profit expectations Thursday.

Outside the Surface write-down, which cost seven cents a share, it reported earnings per share of only 66 cents against Wall Street projections of 75 cents on revenues of $19.9 billion, up 10% year-over-year, when the pundits were counting on $20.7 billion.

Nearly all its business units missed internal projections and its share price dropped 6.3% after-hours to $35.44.

For instance, its server and tools business was supposed to grow 12% but was up 9% instead. The Windows unit, ostensibly up 6%, was really down 6% excluding revenue associated with a Windows 8 promotion. Similarly its Office business appeared to grow 14% but the number was really only 2% excluding the results of an Office upgrade offer.

Microsoft offered little guidance about fiscal 2014 other than to say that operating expenses should be down to between $31.3 billion-$31.9 billion, which is lower than its previous estimate of $31.6 billion-$32.2 billion.

Microsoft's recently installed CFO Amy Hood said, "While our fourth quarter results were impacted by the decline in the PC market, we continue to see strong demand for our enterprise and cloud offerings, resulting in a record unearned revenue balance this quarter. We also saw increasing consumer demand for services like Office 365, Outlook.com, Skype, and Xbox Live. While we have work ahead of us, we are making the focused investments needed to deliver on long-term growth opportunities like cloud services."

More Stories By Maureen O'Gara

Maureen O'Gara the most read technology reporter for the past 20 years, is the Cloud Computing and Virtualization News Desk editor of SYS-CON Media. She is the publisher of famous "Billygrams" and the editor-in-chief of "Client/Server News" for more than a decade. One of the most respected technology reporters in the business, Maureen can be reached by email at maureen(at)sys-con.com or paperboy(at)g2news.com, and by phone at 516 759-7025. Twitter: @MaureenOGara

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