Microsoft is not going to have a good day today. The company just released their earnings report for the last quarter of financial year 2012 (ending June 30 of this year). They posted a profit of $ 19.90 billion, which is up from $ 18.06 billion for the same quarter the previous year. However, this was below analyst's predictions of $ 20.73 billion.
As of this writing Microsoft stock is down 3.4 %, and analysts are changing their tune on the company. Raymond James and Cowen, most harshly has changed the company's rating a "market perform", meaning it will perform on average with other stocks in the S&P 500, and is a neutral assessment. This is a downgrade, essentially, from 'Buy" to 'Hold'. RBC Capital has also switched to give them a neutral rating. Overall, 2 analyst firms are rating them a "Sell", one as a "Buy" and 25 as a "Hold."
In plain English, while Microsoft definitely had a profitable year, everyone sees tthem underperforming and are cutting down on projected profits for the company. There seem to be no end of reasons pointed at for the lowered performance, from Surface, to general declining PC sales, and so forth. One seeming egregrious mistake was lowering the price of the Surface so that Microsoft would swallow an $ 800 million loss.
If you're interested in the performance of the Xbox, their Entertainment and Devices division posted $ 1.9 billion in revenue. However, the 360's actual performance here is obfuscated, since this division also encompasses Surface, Windows Phone, and Skype.
Microsoft announced sweeping changes in the past month after a broad reorganization that put Xbox under Julie Larson-Green and Terry Myerson. They haven't clarified what form financial reports will take after the reshuffle, but we hope they are more transparent with their console's sales, as Sony and Nintendo are in their financial statements.
UPDATE: At the end of stock trading day, Microsoft lost $ 32 billion in value. Analyst Rick Sherlund, who has been following the company since the 1980s, sent a note to clients questioning the chances the reorganization will be succesful. It's a pretty rough time for the company to be launching a new console. You can read more about it here.
