Microsoft has reported an increase in revenue and sales. This comes as surprise after many analysts predicted less growth for the company. The news has helped to boost its shares. Microsoft made large shipments of its Xbox One. It managed to sale 3.9 million of the game consoles. This is great news for the company, which has been in close competition with Sony. The latter recently introduced the PlayStation 4 console about a week before Microsoft’s latest game console was available in the market.
The software giant’s good fortunes can also be attributed to the sales of its Surface tablet. The tablet has been a hit and it has brought in about $900 million in earnings. The tablet was not a huge hit when it was introduced into the market. Microsoft had to write down almost $1 billion in its inventory because of the slow sales in the initial years. This suggests that there has been a significant turnaround for the tablet.
In spite of the increase in earnings and sales from the Surface tablet and its game console, Microsoft is still facing challenges when it comes to PC sales. There is less demand for PCs and this is not good for the company. Consumers are increasingly embracing tablets, laptops, and smartphones because they are mobile. This proves a challenge for Microsoft, which has relied on PC sales for several years now. Windows 8 and Windows 7 sales went down by 20% in the fourth quarter. According to reports from the company, its earnings from Windows have gone down by 3% in the fourth quarter of 2013. However, the company reported a 12% rise in businesses licensing. This allowed the company to compensate for the slow consumer sales.
A statement from Microsoft states that the company made more than $24.5 billion in sales in the second quarter. This is a 14% increase compared to the same period the previous year. The company’s profits have also gone up by 3% and now stand at $6.6 billion and a share is now valued at 78 cents. This may not seem significant but it is higher than what Wall Street analysts expected. According a Thomson Reuters study, the analysts predicted that the company would make about $23.7 billion in earnings and its earnings per share would be 68 cents.
The growth in earnings and sales could not have come at a better time especially for Microsoft’s CEO Steve Ballmer. He is leaving the company and there are already questions about his successor. There is no doubt that his replacement will face a significant challenge especially with the increasing competition in the industry. Microsoft needs to find a way to sustain this growth as PC sales continue to decrease. The successor needs to steer the company in a new direction. The software company is likely to announce Ballmer’s successor in a couple of months. The tech industry had a great run in 2013 and Microsoft was one of the beneficiaries. However, this success is not evident in 2014. The uncertainty about the company’s next CEO is having a negative impact on its stock. On the other hand, the company has to deal with low PC sales and the growing popularity of mobile devices.