Microsoft stock price down 11.40 percent in trading Friday

You would think that champagne bottles would be popping if you owned stock in a company that announced it had $19.90 billion in revenue and a net profit of $4.97 billion for its last fiscal quarter, which is what Microsoft reported for its second quarter 2013 calendar earnings on Thursday.

Instead, those financial results failed to meet the expectations of analysts, who were expecting higher numbers from the team at Redmond. As a result, Microsoft's stock price took a beating today on the NASDAQ stock market. After going down as much as 12.2 percent in trading, the price recovered a little bit at the end of the day to settle at $31.40 a share. That's down $4.04, or 11.40 percent, from Thursday's close. It's also the biggest single day dip in its share price in 13 years.

Part of the reason for the downturn might have been the one time $900 million charge Microsoft put into its revenues Thursday because of the new price cuts on the Surface RT tablet. Indeed, the Internet seems to be full of editorials and analysts reports today proclaiming that Surface RT, and Windows RT as a whole, is a big failure.

Microsoft seems to know it needs to make some changes, which is why it announced a major corporate reorganization earlier this month. On Thursday, Microsoft CFO Amy Hood tried to make the best of the company's current situation, stating, "We know we have to do better."

Source: Yahoo Finance | Image via Yahoo

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Maybe we are overreacting to this story. Maybe their stock really didn't fall and the market had a glitch. It could be running WIndows after-all

On Tuesday the beleaguered CRAPPLE will report record sales and profits yet their stock tank 5-10%. Microsoft on the other hand will rise to top with Windows powered devices.

Indeed, the Internet seems to be full of editorials and analysts reports today proclaiming that Surface RT, and Windows RT as a whole, is a big failure.

We don't even need to speculate to realize that. There's no excitement surrounding these products outside the Windows-oriented communities.

Microsoft should rename Windows RT = Surface OS. Suddenly it's not tarnished by the "Windows" name anymore and consumer are not confused as to what the purpose is. They would now know it means a tablet OS.

Of course it did. It drops in response to bad news, good news, and news of a neutral theme.

The only time MSFT rises, gradually, over a period of years is in the general absence of news.

I'm no stock analyst but it seems like if you were able to zoom out of that graph and see more than four days worth of trades and more than a $6 price variance this might not seem as monumental.

spudtrooper said,

still not as bad as the freakout apple had heh

No, nowhere near that 40% crash. Microsoft would have to crash to $21 to match that.

spudtrooper said,

lots of value at current price and it is going up after hours. market freak out.. still not as bad as the freakout apple had heh

31.4 vs 424.95. sheesh. that's a comfort.

Albert said,

31.4 vs 424.95. sheesh. that's a comfort.

You do understand that the stock price compared to another's is largely meaningless right?

Albert said,

31.4 vs 424.95. sheesh. that's a comfort.

Microsoft has an order of magnitude more shares issued. Your comparison is beyond meaningless.

rfirth said,

Microsoft has an order of magnitude more shares issued. Your comparison is beyond meaningless.

oh so you are saying it's like indonesian rupiah (i.e. microsoft) compare to say u.s. dollar (i.e. apple). i get it. i get it.

The entire IT market is shrinking (specially for Intel) so, it is not so bad. 10% is fine for MS, specially since the shares was inflated.
However, the MS must acts carefully and cut unsuccessful products (Windows RT / Surface RT).

It's really weird if not stupid decision to disclose the Surface losses, especially because it wasn't yet a loss . They could have put in a better way .

Microsoft is clearly a company on the decline, no matter how they and their fanboys spin it. Will they be around in 20 years? Sure, but they will never dominate as they once did. Those days are over.

And please, I am a longtime Microsoft fan. Back in the day, I stood outside stores waiting until midnight for a new OS or whatever.

They had a good run. At the right place and time in history.

MS is doing it fine. They miss with Surface RT (and may be with Surface Pro) but with the rest, they profit. However, the fires Sinofsky (and later other executives), hurts the credibility of MSFT. Also, people are not quite convinced about Modern UI.

With Microsoft's series of major bad decisions over the past two years, it is no wonder Microsoft is in a decline. How soon will Microsoft regain their senses and get reconnected with real-world users to come up with usable products? Perhaps somewhat oversimplified; but smartphones, tablets, and laptops/desktops are three entirely different products, each with with their own unique needs. Why Microsoft chose to not create a separate OS for each product line is one huge mystery. We are not seeing the results of those poor decisions.

COKid said,
Microsoft is clearly a company on the decline, no matter how they and their fanboys spin it. Will they be around in 20 years? Sure, but they will never dominate as they once did. Those days are over.
And please, I am a longtime Microsoft fan. Back in the day, I stood outside stores waiting until midnight for a new OS or whatever.

They had a good run. At the right place and time in history.

Did I catch your joke. I've been hearing haters like you preach the diminish of Microsoft for decades. Keep dreaming iSheeps/Fandriods. Your beleaguered company that you worship is no Better than Microsoft in the long term. Back to your bridge you go little fella.

It has only become a great product after months of updates and firmware fixes. It was priced too high, and yes, they F'd up. MS needs to learn how to hit the ground running.

But this Surface product can recover, they need to price it accordingly. Hey, if they didn't F-it up the first time around, they wouldn't be Microsoft!!!

It's not that they need to hit the ground running so much as it is they need to spend more time seeing what works and what doesn't, and be much more in touch with what people do than trying to create something they THINK people do.

Apple for instance has centered their products around what people want to do, and it's proved to bring them nothing but success.

You should take a look at the amount of research that went into designing Windows 8 and the Surface tablets. Some was published in the Building Windows blog. It's ALL based upon what people do and not what someone *thinks* people do.

Skwerl said,
You should take a look at the amount of research that went into designing Windows 8 and the Surface tablets. Some was published in the Building Windows blog. It's ALL based upon what people do and not what someone *thinks* people do.

Dude, I sell Microsoft solutions every day. I know the ins and outs, I know their goals and direction. Doesn't change my opinion.

Goals and direction have nothing to do with the details. Check out the research in the Building Windows blog from about a year ago.

I'm not saying Microsoft didn't do their research, but how the end product resulted, it needs a bit of explanation to get people oriented to the system. The most common thing I hear when I'm doing demos is, "How was I supposed to figure that out??"

That's all I'm saying here, that the OS could've been a bit more user friendly. That intro video does absolutely nothing when people are having their systems built for them, gifted, and so forth to where they aren't going to see that introduction to Windows 8.

Anyway, I'm the guy that exists to ensure people understand how to use the products their buying in order to reduce negative comps and such. I'm not saying Windows 8 is bad by any means, but just that it could have been better (hence the coming of 8.1). It really does put a smile on my face when I get an 80 year old man learning the product and can see he's enjoying what he's seeing.

There is no evidence of his greatness. All he's done is ride the cash cows that Bill Gates created. He's poured untold billions into online, XBox with negative ROI.

It's the Surface RT disaster. This is all on Ballmer. What made him think to authorize the manufacture of 4-5 million of these without the proper introspection?

I would suggest that 'proper introspection' was performed and that this disconnect with reality is part of MS's problem.

Look at the Xbox 1 fiasco, Look at the Windows 8/start button fiasco. I see a pattern.

Does Ballmer really want the company to succeed? Could this be karma?

I have a feeling that anyone who dares challenge the "Windows is God" mentality gets fired there. There is zero introspection allowed. I think the #1 reason why Apple is so off-the-charts successful is the introspection of Steve Jobs, Ive and others they influenced in the area of design.

Microsoft should've done what a lot of us were saying before the Surface RT launched--use the early Xbox strategy (undercut your competitors in price) instead of the Zune strategy (sell a premium product at a premium price).

It turns out, we were right. Sadly, Surface is the new Zune. It is considered a failed product & can probably never recover. First impressions matter, and Microsoft *bleeped* it up. Maybe they can still save it by releasing the next Surface RT at a competitive price--$299 (I think $349 is still too expensive). Also, they should stop asking OEMs to create RT products. This way their toes won't get stepped on when Microsoft sells RT at a breakeven price.

I think the Surface Pro will be fine. It's a premium product that deserves a premium price. Surface RT does not. Not yet anyway. Especially now...

cybersaurusrex said,
Microsoft should've done what a lot of us were saying before the Surface RT launched--use the early Xbox strategy (undercut your competitors in price) instead of the Zune strategy (sell a premium product at a premium price).

It turns out, we were right. Sadly, Surface is the new Zune. It is considered a failed product & can probably never recover. First impressions matter, and Microsoft *bleeped* it up. Maybe they can still save it by releasing the next Surface RT at a competitive price--$299 (I think $349 is still too expensive). Also, they should stop asking OEMs to create RT products. This way their toes won't get stepped on when Microsoft sells RT at a breakeven price.

I think the Surface Pro will be fine. It's a premium product that deserves a premium price. Surface RT does not. Not yet anyway. Especially now...


There's no way to really know if you were right just because the other approach failed.

I agree that the Surface brand might be irrevocably harmed by this. What does RT mean anyways to the average consumer? RT = run time? It's the name of a API!

Where clearly Microsoft thinks that lowering the price is the solution, because they're practically giving them away at conferences, schools and now (finally) lowering the price for consumers.

I'm not saying that the Surface RT hardware isn't premium. I own one, and I think it makes the iPad look dated. It's a beautiful device. But until there are more apps & more powerful ARM processors to power it, Microsoft needs to be realistic... and that's why I believe they should've priced them to move from the beginning. That would've gotten them in people's hands (so they're friends could see how cool they were) and so they would be viewed as a "hot item" right out of the gate.

Instead, we have this--the next Zune. It sucks... because I like my Surface RT. But the reality is that now that consumers view it as a dud, they'll shy away. I mean, who wants to buy a dud? Most consumers want to buy a "cool" product. And when you're spending that amount of money, who could blame them?

cybersaurusrex said,
Where clearly Microsoft thinks that lowering the price is the solution, because they're practically giving them away at conferences, schools and now (finally) lowering the price for consumers.

I'm not saying that the Surface RT hardware isn't premium. I own one, and I think it makes the iPad look dated. It's a beautiful device. But until there are more apps & more powerful ARM processors to power it, Microsoft needs to be realistic... and that's why I believe they should've priced them to move from the beginning. That would've gotten them in people's hands (so they're friends could see how cool they were) and so they would be viewed as a "hot item" right out of the gate.

Instead, we have this--the next Zune. It sucks... because I like my Surface RT. But the reality is that now that consumers view it as a dud, they'll shy away. I mean, who wants to buy a dud? Most consumers want to buy a "cool" product. And when you're spending that amount of money, who could blame them?


They've lowered prices to clear inventory; not necessarily that they're implementing the "early Xbox strategy."

CygnusOrion said,
What does RT mean anyways to the average consumer? RT =

RT = ReTarded

its a bad naming choices MSFT, really bad ... i bet whoever cough up the 'RT' naming idea doesn't think about how it could be negatively associated with 'retarded'.

CygnusOrion said,
I agree that the Surface brand might be irrevocably harmed by this. What does RT mean anyways to the average consumer? RT = run time? It's the name of a API!

Surface RT should never even launched in the first place. Not only it confuse customers but it has no meaning behind it.

stock market doing its thing. longers are cashing out their profits from the last few months,and ready for another cycle to do it again.

zeroomegazx said,
"It's also the biggest single day dip in its share price in 13 years."

doing its thing eh?

its also had a huge run-up in the last little while. Or at least for this stock ticker. Microsoft generally always stayed in that 25$ range, went down to low 20's now it shot up to 35. I believe it was at 35 not too long ago and went down to 28 or something. I never invested, but still think Microsoft was a good buy in the 20's, kind of okay in 30's but being the sloth Microsoft is, its not exactly a value investment.

auziez said,

its also had a huge run-up in the last little while. Or at least for this stock ticker. Microsoft generally always stayed in that 25$ range, went down to low 20's now it shot up to 35. I believe it was at 35 not too long ago and went down to 28 or something. I never invested, but still think Microsoft was a good buy in the 20's, kind of okay in 30's but being the sloth Microsoft is, its not exactly a value investment.

Exactly. There was a lot of hype, which caused expectations to get too high.
Same situation as Apple.

zeroomegazx said,
"It's also the biggest single day dip in its share price in 13 years."

doing its thing eh?

its not like the stock crashed, it was at this price just 3 months ago.

vcfan said,

its not like the stock crashed, it was at this price just 3 months ago.

Absolutely. It was increasing in value at an incredible pace... way too quickly. It was obviously heading for a correction.

rfirth said,

Absolutely. It was increasing in value at an incredible pace... way too quickly. It was obviously heading for a correction.

Unfortunately it had also been dead for the last ten years; and yes a correction was expected but not so severe. I am still reading the Earnings Release FY13 Q4 but, unless I am missing something and it could be easily so, I do not see anything justifying such drop. BTW right now is down 10.9; it might have found the point of resistance considering that almost 200 millions shares were exchanged and volume is a much more important indicator than the price alone.

Edited by Fritzly, Jul 19 2013, 10:49pm :

its starting to hit oversold territory imo. we'll see what happens in the next few days, but I expect a little bounce back in the short term. I think its an overreaction to the $900 million writedown, but in the long term, that will help the numbers on future earning reports.

I certainly wasn't expecting it to drop 10+% all at once, but since the middle of April it has been increasing too quickly. It has been taking huge jumps into ranges it hasn't been in for a long time.

It's certainly entering into oversold territory, though.

Fritzly said,
Unfortunately it had also been dead for the last ten years;

If you consider that MSFT has paid out $8 per share in dividends during that stretch, it's not as "dead" as people might think.

Scroogled said,

If you consider that MSFT has paid out $8 per share in dividends during that stretch, it's not as "dead" as people might think.

Shares are not bonds; calculation of the ROI involves different parameters.

zeroomegazx said,
doing its thing eh?

Analysts get it partly right. Surface and Win RT are a total failure. As Microsoft have been told ad-infinitum for the past 2 years

dvb2000 said,

Analysts get it partly right. Surface and Win RT are a total failure. As Microsoft have been told ad-infinitum for the past 2 years

you mean windows rt. anyways, i don't get some of you guys who are quick to label something a failure 7 months in. there are many products that you can look up that took time to mature and ended up being widely successful. xbox for example,and now we are seeing it with windows phone,which is showing massive growth. windows rt doesn't even have to do most of the work,it can ride the coat tails of windows 8,and it inherits all of its success by doing absolutely nothing.

vcfan said,
stock market doing its thing. longers are cashing out their profits from the last few months,and ready for another cycle to do it again.
Yeah, no...This is not just the stock market doing it's thing. They lost $32 billion (yes Billion) in stockholder value today - that's pretty significant. This is the result of MS announcing their fourth quarter and full-year results.

tsupersonic said,
Yeah, no...This is not just the stock market doing it's thing. They lost $32 billion (yes Billion) in stockholder value today - that's pretty significant. This is the result of MS announcing their fourth quarter and full-year results.

Agreed. It's just one of a few things that triggered this.

As you say, Tablets, specifically Surface have been a massive letdown. Nearly $1bn written off? Ouch

Lacklustre demand for Windows 8. We could argue all day over the Start Menu vs Start Screen but at the end of the day, consumers haven't warmed to it yet despite it being 9 months old now.

The XBox One announcement. Taken badly by journalists and consumers alike. Sure they have seemingly corrected the problems but it tarnished a once well respected brand.

I'm really not surprised that people jumped ship following these results, sure they made money but as an investor, I'd be worried about future profitability.

zeroomegazx said,
"It's also the biggest single day dip in its share price in 13 years."

doing its thing eh?


Yup. Happens every decade or so, give or take a few years... /s