Microsoft's Profit Plummets 22 Percent Ahead of Windows 8 Launch

Paul Lilly

Lest there be any doubt whatsoever that Microsoft has a lot riding on Windows 8, the Redmond outfit's financial report for its first fiscal quarter of 2013 (which ended September 30, 2012) contained more thorns than roses. For example, the company's quarterly earnings dropped 22 percent sequentially to $5.47 billion, as slumping PC sales continue to adversely affect tech firms across the board. Revenue also declined, dropping 8 percent to $16 billion, down from $17.37 billion one year prior.

Those are still some pretty big numbers, so it's not as if Microsoft is at risk of going under. Still, it's yet another reflection of a stagnant PC market, and it underscores what's at stake with Windows 8, for Microsoft and for the industry as a whole.

"The launch of Windows 8 is the beginning of a new era at Microsoft," said Steve Ballmer , chief executive officer at Microsoft. "Investments we’ve made over a number of years are now coming together to create a future of exceptional devices and services, with tremendous opportunity for our customers, developers, and partners."

Tablet and smartphone devices have been cutting into PC sales, and it's the reason Microsoft has devoted so much time, money, and resources into designing a unified interface for Windows 8. At the same time, desktops are anything but dead (the market's still growing, after all, just not steadily), and Microsoft needs Windows 8 to be a success when it launches on October 26.

In the meantime, Microsoft reports that its Windows & Windows Live Division generated revenue of $3.24 billion, a third less than what it was a year ago. Adjusting for pre-sales of Windows 8 to OEMs, Microsoft says the decline is closer to 9 percent than 33 percent.

"We’re incredibly excited to be approaching general availability of Windows 8 and Windows RT," said Kevin Turner, Microsoft chief operating officer. "We’ve already certified more than 1,000 systems for Windows 8 from our hardware partners, ranging from the smallest tablets and convertibles to touch-enabled ultrabooks and all-in-ones to the most powerful desktop computers."

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