Ballmer: We Made Too Many Surface RTs
After Microsoft’s (NASDAQ:MSFT) disappointing 4th quarter-report, in which $900 million was written-off for reasons “related to Surface RT inventory adjustments,” it seems as though Ballmer is finally taking some of the blame. At an internal town hall event earlier this week, Ballmer admitted “We built a few more devices than we could sell.”
The fourth-quarter report showed Microsoft had made $5 billion, or 59 cents per share, which included the $900 million write-off — a clip of 7 cents per share. Despite the fact that the results were actually a 5 percent increase from the year-ago quarter, the write-off was one of the main reasons the company missed earnings expectations of 75 cents set by most analysts.
“A few more devices” is an understatement to say the least. On top of the $900 million write-off due to excess inventory, Microsoft is now cutting the price of it’s Surface RT tablets by 30 percent worldwide. According to those attending the meeting, Ballmer and COO Kevin Turner said the write-down was a necessary price adjustment to make sure the company can sell the tablets.While rumors abound that the price cuts are also indicative of impending new devices, Ballmer did not provide any looks into the new wave of devices. However, he did confirm that devices are being tested which will have important improvements over the previous generation. And the word on the street is that Microsoft has been testing the new surface tablets with the Qualcomm Snapdragon 800 processor.
Ballmer also showed concern regarding the state of Windows across all platforms, from PC’s to mobile. “We’re not selling as many Windows devices as we want to,” he said.
This echoes the words of Microsoft Chief Financial Officer Amy Hood who told Bloomberg, “We know we have to do better, particularly on mobile devices and so that’s a big reason we made the strategic and organizational changes we made last week.”