Why Microsoft Shares Got Totally Crushed

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Microsoft (NASDAQ: MSFT  ) got totally crushed today, down by 12% at the low, after the software giant reported disappointing earnings last night.

So what: Revenue in the quarter came in at $19.9 billion, which translated into earnings per share of $0.59. Both figures were shy of Street forecasts, but perhaps more troubling to investors was a large inventory charge related to Microsoft's Surface RT tablets.

Now what: Microsoft is taking a $900 million charge over its first foray into tablet hardware, which adversely affected the bottom line by $0.07. CFO Amy Hood confirmed that the write-down was partially related to the $150 price cut that was implemented this month. Meanwhile, the struggling PC market continues to take its toll on Microsoft's core businesses as its transition to a devices-and-services company remains uncertain.

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  • Report this Comment On July 19, 2013, at 1:59 PM, DrGoldin wrote:

    This article should have been called "Microsoft Shares Got Totally Crushed," not "Why Microsoft Shares Got Totally Crushed."

  • Report this Comment On July 21, 2013, at 10:07 AM, jds47 wrote:

    Much of this, I believe, is a fear that the emperor has no clothes. There is doubt about the future of PCs as we know them (WinTel) and therefore of the future of the companies that brought us to the party. Bad quarterly results, a question about the hardware future of a company that is rebranding itself as a "devices and services" company, and the aftereffects of being up over 30% YTD before Friday led to this selloff. MSFT is still a great company but was way overbought.

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