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Microsoft posts quarterly revenue of $16.01 billion, net income drops by 22 percent ahead of Windows 8 launch

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Microsoft Logo (Verge Stock)
Microsoft Logo (Verge Stock)

Ahead of taking on a fundamental shift in business strategy, Microsoft today announced revenue of $16.01 billion for fiscal Q1 2013. That fell just below Wall Street expectations that had called for $16.5 billion in sales. Net income plummeted to $4.47 billion as the company readies major hardware and software initiatives due in the weeks ahead.

As expected, Windows lagged significantly in the months preceding Microsoft's much-publicized debut of Windows 8. The Windows and Windows Live divisions fell to $3.24 billion, a decrease of 33 percent compared to where things stood one year ago. That's largely attributable to waning PC momentum: recent estimates from Gartner indicate that worldwide PC shipments fell 8 percent in the third quarter as consumers await the next version of Windows, due on October 26th. The company's reliable business division (which includes Office) grew by 1 percent to $5.50 billion in Q1.

Led by Xbox 360, which remains the top-selling console in the US, the Entertainment and Devices Division dropped a meager one percent and tallied $1.95 billion in revenue. Still, the imminent arrival of Microsoft's Surface tablet will likely make those figures — which have traditionally held steady — far less predictable in Q2. The Wall Street Journal predicts Redmond is prepping between 3 to 5 million of the Windows RT devices and the success (or failure) of that effort will undoubtedly be felt during its next financial update. The roadmap for Windows 8 PCs is also looking healthy: Microsoft says it has certified over 1,000 systems for the new OS covering a wide variety of hardware including tablets, convertibles, ultrabooks, all-in-ones, and desktops.

Correction: A previous version of this article stated that Microsoft's net income was $5.31 billion. It has been corrected to reflect that it was $4.47 billion.