Google Prints Money, Over $14 Billion Earned In Q2 as Microsoft Reports Shy of $5B with $900 Million Write Down on Surface

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News Posted: Thu, Jul 18 2013 6:23 PM
It's good to be Google. It's also good to be Microsoft. Both are tech giants, and both seem to have little problem raking in billions each quarter in pure, unadulterated profit. But to Wall Street, it's all about perspective. While Microsoft managed to pull in $19.90 billion in revenue, $6.07 billion in operating income, and $4.97 billion in net income in its most recent quarter, it also suffered a $900 million charge "related to Surface RT inventory adjustments." That's a pretty technical way of saying that no one is buying the Surface RT, and it's taking a blow of nearly a billion dollars as a consequence to poor sales. It also explains the recent price cut to $349. Ouch.

Of course, it still made many billions this quarter, but the long, long-term view for Microsoft is perhaps a scary one. The company's CFO admits that the PC business as a whole is declining, so it's looking to cloud and enterprise sectors to make up the difference, as well as entertainment (Xbox One, namely). The company also showcased operating expense guidance downward to $31.3 billion to $31.9 billion for the full fiscal year ending June 30, 2014, which isn't apt to please investors who are constantly looking for growth, even from the ether.

Google, on the other hand, saw its revenue increase 19% year-over-year to $14 billion in the quarter. GAAP net income including net income from discontinued operations in the second quarter of 2013 was $3.23 billion, compared to $2.79 billion in the second quarter of 2012. Google-owned sites generated revenues of $8.87 billion, or 68% of total Google revenues, in the second quarter of 2013. This represents an 18% increase over second quarter 2012 Google sites revenues of $7.54 billion.

Of course, Google's core businesses are all much newer than Microsoft's core businesses, so the company sees a bright future trend while many suspect that the peak of Microsoft's earning days may have already happened. We'll be interested to see what happens next quarter; with the holidays impending, things always seem to get interesting in the turn to the November / December home stretch.
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realneil replied on Thu, Jul 18 2013 8:50 PM

Microsoft thought for sure that the surface was gonna be a big hit. I think that it ~would~ have been if they would have priced it right. But they had huge Apples in their eyes, and thought that could rake in those iProfits like the competition does.

Win-8 is also a factor in this problem. People really resent Win-8 and the Metro turd that comes with it. They resent it enough not to overpay for a tablet PC.

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RiCoFrost replied on Thu, Jul 18 2013 10:13 PM

Just thought I would add....

Microsoft Corp. today announced quarterly revenue of $19.90 billion for the quarter ended June 30, 2013. Operating income, net income, and diluted earnings per share for the quarter were $6.07 billion, $4.97 billion, and $0.59 per share. These financial results include a $900 million charge, or a $0.07 per share impact, related to Surface RT inventory adjustments.

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