Microsoft takes $900 million hit for unsold Surface RTs in 4Q13 earnings

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An otherwise healthy earnings statement from Microsoft was overshadowed by a substantial $ 900 million charge attributed to “Surface RT inventory adjustments.” The ARM-powered tablet, Microsoft’s first foray into selling computers, recently had its price cut by $ 150 to $ 349 amid long-standing reports of poor sales. With this $ 900 million charge, those poor sales and price cuts are hitting Microsoft’s bottom line.

Revenue for the fourth quarter was $ 19.896 billion, up 10 percent on the same quarter last year. Operating income was $ 6.073 billion and earnings per share $ 0.59, both essentially unchanged from a year ago.

As ever, Microsoft also published non-GAAP numbers. The GAAP numbers defer revenue that was taken for Office 2013 and Windows 8 prior to the availability of the software, not booking the revenue until the software is actually delivered. The non-GAAP numbers book the revenue as soon as it’s taken. Under that metric, quarterly revenue was $ 19.114 billion, up three percent year on year. Operating income was $ 5.291 billion, down 24 percent year on year, and earnings per share were $ 0.52, down 29 percent on a year ago.

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