As Microsoft prepares to launch Windows 8 — a product it hopes will be transformative — the company posted financial results on Thursday showing that its sales are treading water.
The Redmond, Wash.-based company had revenue of $17.3 billion in its fiscal first quarter — dead flat compared with its year-ago sales. Those results include $1.4 billion in early Windows 8 sales that the company has chosen to defer until next quarter. Excluding that deferred revenue, Microsoft had sales of $16 billion, seemingly short of the $16.4 billion analysts were expecting.
Microsoft said its net income fell 22% to $4.5 billion for the quarter, which ended Sept. 30. Those results did not include a charge of 13 cents per share for the deferred Windows 8 sales. Including the charge, Microsoft earned 53 cents per share.
Shares of Microsoft fell 3% after hours.
Microsoft is gearing up for two big launches next week: Windows 8, a radical redesign of the world’s most ubiquitous operating system; and Surface, the first PC tablet of its own design, on Oct. 26.
“The launch of Windows 8 is the beginning of a new era at Microsoft,” Steve Ballmer, Microsoft’s CEO, in a written statement. “Investments we’ve made over a number of years are now coming together to create a future of exceptional devices and services, with tremendous opportunity for our customers, developers, and partners.”
But Windows 8 will hit the scene at an ominous time for personal computers. Adding back in deferred revenue, Windows sales fell by 9% during the past quarter, amid a massive slow-down in PC sales. Sales of Office rose 1%, and Xbox slipped 1%. Strong sales in the Server and Tools division and slightly higher online services sales helped keep revenue flat for the quarter.
Rival Google also reported its quarterly finances Thursday, posting a 20% drop in earnings year over year, on struggles in mobile. Apple is on deck, set to report its earnings on Oct. 25.
