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Microsoft posts first ever loss in quarterly results

Tech giant Microsoft has posted its first ever quarterly loss, losing $492m in the three months leading up to July 2012.

The loss was a dramatic drop from the same period in 2011, where Microsoft’s income was $5.87bn. The loss is being attributed to decreased display advertising revenue from its online services division.

Due to lowering expectations for future growth and profitability in the division, Microsoft wrote down the value of its online advertising business Aquantive by $6.2bn, forming the bulk of the loss. Microsoft acquired Aquantive in 2007, merging it into Microsoft Advertising, but the company has struggled to compete with other rivals in the space including Google.

However, the company’s performance in other areas of the business was still strong and overall revenue for the quarter rose by 4% to $18.06bn.

Microsoft’s efforts in the search market improved with the market share for Bing-powered search engines, including Yahoo’s properties, growing by approximately 26% for the month of June 2012. Its efforts in the search market led to the online services division’s revenues growing by 8% to $735m.

Microsoft’s business division also increased its revenue by 7% to $6.29bn. It highlighted its acquisition of Yammer as something that will bring in enterprise social networking capabilities to the company.

“We delivered record fourth quarter and annual revenue, and we’re fast approaching the most exciting launch season in Microsoft history,” says Microsoft chief executive Steve Ballmer.

Although still performing strongly, the revenue of the Windows division decreased by 13% to $4.14bn, representing falling popularity of the operating system that has enjoyed market dominance for over a decade. Its PC market was flat during the quarter with sales of business PCs up by 1% and consumer PCs down by 2%.

“We are focusing our resources in strategic areas that will deliver shareholder value and long-term growth opportunities,” says Microsoft chief financial officer Peter Klein.

David Hing, London