Microsoft stock drops by 11%

Shares of Microsoft dropped badly on Friday, wiping out billions of dollars of the software companies value. This happened after they announced earnings below Wall Street expectations. They dropped by $4,04 or 11.4% to $31.40 in trading on Friday.

As we reported earlier in the week, Microsoft missed their financial targets on both top and bottom line results. The company reported a new income of $4.97 billion with a loss of $492 million in the same period a year ago. They had to write off $6 billion for their takeover of advertising organisation aQuantive.

Microsoft took a massive $900 million hit for slashing the price of their Surface RT tablet, due to poor demand. The cut in price may be great for consumers, but it is a clear indication to investors that the company are struggling against competitors such as Apple and Samsung.

BGC analyst Colin Gillis wrote in a note to clients “The PC may have reached its peak in 2011, and Microsoft is still struggling to get traction with tablets and smartphones. The write-down of the Surface RT inventory highlights this point.”

Company revenue was healthy, growing by 10% to $19.9 billion, but this was also short of the $20.7 billion they were expected to generate.

Kitguru says: A software giant, but Microsoft always run into trouble when they release hardware.

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