Microsoft Records First-Ever Loss Due To Aquantive, But Xbox 360 Grows (Stock Price Still OK)

Microsoft Stock Price 2012_Thumb

Microsoft announced, last week, its first ever loss for Q2 2012. While Xbox Live continues to grow, Microsoft suffered from effectively wasting $6.2 billion for its acquisition of aQuantative.

Microsoft, as company, is doing well. Unless you’re wasting over $6 billion

Microsoft Stock Price 2012.Jpg
Picture: Microsoft’s Stock Price In 2012 So Far – Range from $28.45 per share to roughly $32.85. (Stock Symbol: MSFT)

It wasn’t just one company releasing its earnings report for Q2 2012 last week, it was seemingly everyone. Microsoft was one such company revealing its earning, and the software giant posted a net loss of $492 million.

Despite the loss, Microsoft made a profit of $18.06 billion. It also increases revenues by 7 percent compared to Q2 2011, with its income of $6.93 billion for the period a 12 percent increase over the previous year.

The bad news is the aforementioned $6.2 billion write-off, as Microsoft describes the flawed deal, of aQuantative. It’s been five years since the acquisition, so Microsoft obviously wasn’t making a return on its investments.

However, there is more good news: the Entertainment and Devices Division, including the Xbox 360, continued to dominate the console market: revenue increased by 20 percent, for Q2 2012, to over $1.7 billion. The Xbox 360 was also the 16th best-selling console over the period, Microsoft revealed last week, despite consistent rumors of a next-generation Xbox console next year. The company launching the $99 Xbox, with a two-year contract, and announced a new Halo 4 Limited Edition console for release this November.

Xbox Booms, Windows Live Shrinks

The Business Division had a 7 percent increase, generating $6.3 billion in revenue. Microsoft’s Windows Live division declined 13 percent – the Windows Live branding is going in Windows 8 – while generating $4.1 billion in revenue.

In total, then, Microsoft generated $73.72 billion revenue with an operating income of $23.76. Not too shabby, is it? CEO Steve Ballmer sounded off by saying the company is approaching its most exciting product launch in the history of the company, referring to the Windows 8 launch, of course. Ballmer also said Microsoft has produced record Q4 and annual revenue.

It’ll be interesting to see how Microsoft transitions from the current- to next-generation Xbox. The company will probably continue to support the former for a couple of years, as developers get used to new technology.


Note by oliversk: Microsoft’s stock price is still doing ok, mostly because Microsoft is about to launch Windows 8 and might really break into the mobile market for the first time. Microsoft investors can only hope they do not risk too much on new acquisitions that may not work out in the future.

Published: Monday, July 23rd, 2012 Last Modified: July 23, 2012

Related Posts

Rate This Article