Drowning at the Surface: RT tablet hits Microsoft where it hurts

Surface RT
It looks a little ominous

Microsoft's no-good, very-bad Surface RT situation got a figure attached to it today as the Redmond company reported a massive hit related to inventory adjustments of the tablet.

Reporting its Q4 fiscal year 2013 financials, Microsoft said it took a $900 million (about £591m, AU$981m) charge from the device no one seems to want. The loss is apparently tied to recent price reductions of the slate.

The slipping PC market didn't help, either. The company earned $19.9 billion (about £12.4b, AU$20.7b) in revenue, up 10 percent from the same quarter last year, but a figure that missed the Street's expectations.

"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," CFO Amy Hood, taking over for Peter Klein, said in the report.

Bright light?

Hood pointed to a focus on long-term growth opportunities such as cloud services, while CEO Steve Ballmer noted work is underway "to deliver compelling new devices...from Microsoft and our partners in the coming months, including new Windows 8.1 tablets and PCs."

In the report and on its investor call, Microsoft leaned heavily on the restructuring that was announced last week, a move it assured puts it on the path to success.

The recently announced Xbox One didn't have an impact on Microsoft's earnings as the console hasn't been released yet. It, along with a - as Hood put it - more efficient Microsoft could yield better numbers in coming quarters.

The Windows division did see a 6 percent jump from the same time last year, bringing in $4.4 billion (about £2.89b, AU$4.8b) in revenue. Entertainment and Devices grew 8 percent from the same time last year, scoring $1.9 billion (about £1.2b, AU$2.07b) in revenue.

Michelle Fitzsimmons

Michelle was previously a news editor at TechRadar, leading consumer tech news and reviews. Michelle is now a Content Strategist at Facebook.  A versatile, highly effective content writer and skilled editor with a keen eye for detail, Michelle is a collaborative problem solver and covered everything from smartwatches and microprocessors to VR and self-driving cars.