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Microsoft quarterly profit tumbles 22% due to weak PC sales

Microsoft has released its recorded earnings for the first financial quarter of 2013. It shows a sharp fall of 22 per cent in the company's profit, as sales of PCs running on the Windows operating system have declined.

The world's largest software company saw its profit drop from $5.74 billion (£3.57 billion) to $4.47 billion (£2.79 billion) this quarter. The profit decline has been further exacerbated by Microsoft’s deferral of $1.36 billion (£847.9 million) in revenue - primarily from its Windows division - which it expects to regain after the launch of Windows 8.

A drop in sales was expected as the aforementioned impending launch of the new OS has left the current gen PCs stagnating. Consumers and business are less likely to invest in a product that will become outmoded in a matter of weeks after purchase, especially in a tight economy.

(opens in new tab)However few expected such a sharp downturn in revenues as Microsoft recorded that sales fell 8 per cent to $16.01 billion (£9.98 billion), with most analysts expecting (opens in new tab) revenues of around $16.42 billion (£10.24 billion).

“I don't control the macro-environment, but there's a huge opportunity in the explosion of devices. There's demand for compelling devices and a connected set of cloud experiences. That's what Windows 8 is all about," said Microsoft's chief financial officer Peter Klein.

“The launch of Windows 8 is the beginning of a new era at Microsoft. 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," said Microsoft chief executive Steve Ballmer of the importance of the Windows 8 launch.

There are also some positives to take from the report as Microsoft reduced the perennial deficit incurred from MSN portal and Bing search engine by 29 per cent to $364 million (£227 million). It also saw a 12 per cent jump in operating profit as its data centre ‘cloud’ services recorded a profit of $1.75 billion (£1.09 billion).