Hurt by a 33 percent decline in its Windows business, Microsoft missed estimates for its first fiscal quarter ended September 30 as it posted 53 cents per share earnings on $16.01 billion in revenue.
Heading into the earnings announcement, the whisper number was for 56 cents per share.
During the same quarter a year ago, Microsoft earned 68 cents a share on $17.37 billion in sales.
Here's how the year-to-year comparisons looked:
- Server & Tools: $4.55 billion up 8 percent
- Microsoft Business Division: $5.50 billion, down 2 percent
- Windows & Windows Live: $3.24 billion, a 33 percent decrease
- Online Services Division: $697 million, a 9 percent increase
- Entertainment and Devices Division: $1.95 billion, a decrease of 1 percent
The immediate reaction among investors was disappointment with the stock down more than 1 percent in after-hours trading.
The results follow on the heels of Microsoft's first loss as a public company last quarter.
"The launch of Windows 8 is the beginning of a new era at Microsoft," CEO Steve Ballmer said in a prepared 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."
While investors will scour the earnings statement for clues to the future -- as well as the investor conference call scheduled for later -- this was one of those rare moments in Microsoft's history where the important news accompanying its quarterly earnings statements was not so much the quarterly earnings statement itself. The reason: next week Microsoft will officially release the Windows 8 operating system as well as its Surface tablet as the company takes its next big steps toward a post-PC world that it has dominated for much of the last three decades. That's a market that continues to slow down, a trend underscored by recent warnings from both Intel and Hewlett-Packard of sluggish demand ahead.
But with PC sales slowing, Wall Street is hoping that the Surface tablet will help secure Microsoft s future. Indeed, Credit Suisse forecast PC shipments to grow by just 5.6 percent year-over-year in calendar 2013. The opposite side of that coin: the firm says that Windows 8 "will have a more meaningful position in tablets than the market appreciates, which we believe will serve as a catalyst for the stock."
Earlier this week, Microsoft priced the Surface tablet beginning at $499 and $599 with the cover-keyboard.
In a statement, Microsoft said the numbers reflected the deferral of $1.36 billion of revenue and $0.13 of diluted earnings per share, related to its Windows upgrade offers as well as to pre-sales of Windows 8 to manufacturers and special offers for its Office suite.