Microsoft takes $900m hit on unsold Surface tablets

Microsoft takes 0m hit on unsold Surface tabletsMicrosoft is still refusing to talk official numbers, but the real impact of the shortfall in Surface tablet sales has been revealed in the company's latest earnings report.

While overall Microsoft continues to chug along like the tech giant it is, the latest financial state of play shows a massive $900m loss on “inventory adjustments” caused by unsold Surface stock.

It's all tied into the heavy price cuts Microsoft has announced recently to try and boost the Surface's sales momentum, particularly the little-loved Surface RT.

Prices of Microsoft's debut tablet have dropped by £120 across the board in the UK, and $150 in the US, with the cuts mirrored in other markets too. Effectively, that means the total value of existing Surface stock has dropped – and dropped a lot, it seems.

Microsoft has structured things so that the loss is absorbed by its total Windows revenue for the quarter, which fortunately was quite healthy otherwise.

But it does suggest that there are still many millions of unsold Surfaces out there in the wild, and they're not going to get any easier to shift – especially with rumours already talking about a second-generation wave of devices running Windows 8.1 and Windows RT 8.1.

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satchef1  Jul. 19, 2013 at 21:24

Getting the write-off out of the way before the reshuffle I expect. Imagine "Devices and Studios" taking a $900M hit in its first quarter. There's no way that division could absorb that loss without leaving a black hole.

Likewise, it was moved to Windows to allow Entertainment and Devices to post a profit of $134M, apparently driven in large part by a quarter on quarter increase in Windows Phone revenue of $222M.

Stelph  Jul. 20, 2013 at 07:09

Well using rough maths that would suggest they have about 6 million surface tablets unsold.

Seems a shame, they look like quite nice devices but I think people are just not sold on the RT idea, i have seen one in the wild and he admitted he regretted buying it, thought it looked pretty cool but quickly realised the app support just wasn't there

JanSt / MOD  Jul. 20, 2013 at 11:54

Lets face it: 98% of non-iOS tabs flopped. Simple.


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