Microsoft Surface lineup is $1.7 billion in the red

Posted on Friday, Aug 08 2014 @ 11:18 CEST by Thomas De Maesschalck
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Microsoft's traditional cash cows are still a major success but the company is struggling to make it in the mobile market. The ARM version of Windows was a big failure, Windows Phone fails to gain traction and now we hear that the company's Surface lineup is estimated to have accumulated $1.7 billion in losses since the device's 2012 launch.

The calculation is made based on Microsoft's 8-K statement with the U.S. Securities and Exchange Commission (SEC) on July 22. Calculations by ComputerWorld show Surface sales resulted in a loss of $363 million last quarter, the largest one-quarter loss for Surface since Microsoft began providing quarterly revenue figures. The 8-K report also reveals that Microsoft took a write-off due to a decision to not ship a new form factor, this likely refers to the cancelled Surface Mini tablet.
Without a cost of revenue figure, it is impossible to calculate a precise gross margin, a rough measurement of profit. However, using information in the 10-K that Microsoft filed last Friday, along with data from earlier reports, it is possible to estimate Surface cost of revenue.

Calculations by Computerworld show that the Surface's cost of revenue for the June quarter was $772 million. With revenue of $409 million, that put the tablet in the red to the tune of $363 million, the largest one-quarter loss for the Surface since Microsoft began providing quarterly revenue numbers.
Source: Computer World

About the Author

Thomas De Maesschalck

Thomas has been messing with computer since early childhood and firmly believes the Internet is the best thing since sliced bread. Enjoys playing with new tech, is fascinated by science, and passionate about financial markets. When not behind a computer, he can be found with running shoes on or lifting heavy weights in the weight room.

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