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Microsoft Posts Record Sales, But Earnings Dip
Microsoft on Thursday credited strong enterprise-driven demand and the introduction of Windows 8 and other new products for record sales numbers in the software giant's fiscal second quarter.
"Our big, bold ambition to re-imagine Windows as well as launch Surface and Windows Phone 8 has sparked growing enthusiasm with our customers and unprecedented opportunity and creativity with our partners and developers," Microsoft CEO Steve Ballmer said in a statement.
"With new Windows devices, including Surface Pro, and the new Office on the horizon, we'll continue to drive excitement for the Windows ecosystem and deliver our software through devices and services people love and businesses need," added Ballmer, who did not participate in an earnings call with analysts and investors on Thursday.
Microsoft reported second-quarter revenue of $21.5 billion, up nearly 3 percent from the $20.9 billion in sales generated in the same period a year ago. But operating income of $7.77 billion declined 3 percent year-over-year and Redmond's profits ($6.38 billion, down 4 percent) and EPS ($0.76 per share, down $0.02) also slipped.
Among its business units, the big year-over-year gainers were Microsoft's Windows Division ($5.88 billion in revenue, up 24 percent from Q2 2012) and its Server & Tools business ($5.19 billion, up 9 percent).
Mac Sales Dip Amidst iMac Constraints, iPad Cannibalization
Mac sales dipped slightly in the fourth quarter, and while Apple CEO Tim Cook attributed part of the drop to iPad cannibalization, supply constraints with the iMac also played a big role, he said.
Apple sold 4.1 million Macs during the quarter, which was down from the 5.2 million it sold during the same time period in 2011.
In a Wednesday conference call with analysts, Cook said the decline is due to three main factors: iMac constraints, the fact that the 2012 fourth quarter was shorter than 4Q 2011, and channel inventory.
Overall, iMac sales were down 700,000 year over year. Apple's revamped iMacs were released in late 2012, but there were "significant constraints" that prevented Cupertino from getting its new desktops to everyone who wanted them. "We believe our Mac sales would have been much higher absent those constraints," Cook said.
Meanwhile, 4Q 2012 was 13 weeks long whereas there were 14 weeks during 4Q 2011. "Last year, in the average week, we sold 370,000 Macs," Cook said.
Finally, channel inventory was down by about 100,000 units without the iMac. "So, if you just take these three factors, they bridge more than the difference ... between this year's sales and last year's sales," Cook concluded.
PC Sales Slump Despite Holidays, Windows 8 Release
Worldwide PC sales continued to decline in the fourth quarter, landing at 90.3 million units, or a 4.9 percent decline from the same period in 2011.
According to data from Gartner, the PC industry's problems stem from more than a weak economy.
"Tablets have dramatically changed the device landscape for PCs, not so much by 'cannibalizing' PC sales, but by causing PC users to shift consumption to tablets rather than replacing older PCs," Gartner principal analyst Kikako Kitagawa said in a statement.
The holiday season proved that, as neither an uptick in low-priced notebooks nor the launch of Microsoft's Windows 8 operating system had a significant impact on PC shipments. Global marketing firm IDC last week reported that worldwide PC shipments were down 6.4 percent, as the October release of Windows 8 failed to boost computer sales.
"Whereas as once we imagined a world in which individual users would have both a PC and a tablet as personal devices, we increasingly suspect that most individuals will shift consumption activity to a personal tablet, and perform creative and administrative tasks on a shared PC," Kitagawa said.
Smartphones Boost AT&T, Verizon to Record Q4 Sales
AT&T had a banner fourth quarter, selling more than 10 million smartphones and toppling its previous record. But was it enough to ease investor concerns?
The company averaged more than 110,000 smartphone sales per day thanks to customers turning to AT&T's portfolio of Android, Apple, and Windows devices.
"We had another incredible quarter of smartphone sales as the mobile Internet continues to drive strong growth in wireless," Ralph de la Vega, AT&T Mobility CEO, said in a statement.
"Combine that with the nation's largest 4G network and lightning fast LTE network that now reaches more than 170 million people and you'll understand why customers continue to choose AT&T in record numbers," he said.
But not everyone feels comfortable with that claim. According to BGR, AT&T's share price quickly fell 2.5 percent following its announcement on Tuesday.
"A possible smartphone slow-down at AT&T started worrying investors last autumn," the site said, "and the new announcement did not alleviate concerns at all."
NPD: Windows Notebook Sales Drop in Holiday Season
Sales of U.S. consumer electronics were on the decline for the last three weeks of the holiday season (preceding Christmas), continuing an overall decline that's been observed since 2009.
The latest figures from NPD indicate that shoppers front-loaded their purchases during the first two weeks of last year's holiday shopping season (starting November 18), coughing up around 46% of all total consumer electronics purchases during this time.
While the elevated shopping rates during this time period continues a three-year trend, it also means that shopping during the last three weeks of the holiday season fell to their lowest levels observed since 2009.
"For the third consecutive year sales trends worsened in the later part of the holiday season," said Stephen Baker, vice president of industry analysis at NPD, in a statement. "The hyped-up promotion of Black Friday, Cyber Monday and now Thanksgiving Day has proven remarkably effective in moving sales into the early part of the holiday season. Trends like online shopping and self-gifting have intensified the focus on the more event -driven early part of the holiday season."
In total, sales of Windows notebooks dropped 11 percent from 2011's holiday season, with their average selling price rising just $2 to $420.
Or, as NPD's press release puts it, "Despite the hype, and hope, around the launch of Windows 8, the new operating system did little to boost holiday sales or improve the year-long Windows notebook sales decline."
Huge Christmas for iTunes, App Store
It was a very appy Christmas for Apple, which saw an 87 percent rise in Christmas Day app downloads.
The season's giving spirit meant loads of new iOS devices, which obviously needed to be stocked with applications and games.
New owners didn't wait long before heading to Apple's App Store on Dec. 25, boosting the daily download figures by 87 percent compared to the daily average for December, according to app analytics tracker Distimo. Based on data collected from more than 40 countries, Cupertino also saw a 70 percent revenue jump on Christmas.
All download volumes measured by Distimo counted both free and paid apps, while revenue was calculated from one-off and in-app purchases.
"Given that the iPad downloads and revenues rose by 140 percent and 83 percent respectively, the iPad seems to have been a very popular gift," Distimo's Gert Jan Spriensma wrote in a blog entry.
Only two of the top 10 most successful iOS applications downloaded on Christmas Day were even holiday-related, according to the site's figures. YouTube took the No. 1 spot, followed by iOS newcomer Google Maps.
Amazon Still Tops in Holiday Customer Satisfaction
Amazon once again earned top-of-the-class marks for customer satisfaction during the 2012 holiday season, according to ForeSee's annual Holiday E-Retailer Satisfaction Index.
The online retailing giant has been ranked No. 1 in the index for eight consecutive years. Amazon said Thursday that this year's holiday selling season was its biggest ever, "with over 26.5 million items ordered worldwide on its peak day, which is a record-breaking 306 items per second."
"To achieve such high customer satisfaction scores and sustain them over time is a remarkable feat that remains unmatched by any other e-retailer," ForeSee president and CEO Larry Freed said in a statement.
Amazon.com scored an 88 in a customer satisfaction scoring system maxing out at 100, as compiled by the online customer analytics firm. That was a full three points better than LLBean.com, the second-place finisher in ForeSee's rankings (for the list of the Top 13 E-Retail Satisfaction Leaders, see image below).
Video Game Sales Drop Despite Wii U, Black Ops 2 Launches
The video game industry faced another tough month in November, despite the launch of Nintendo's Wii U console, and blockbuster titles like Call of Duty: Black Ops 2 and Halo 4, according to The NPD Group.
Total video game sales fell 11 percent from $2.87 billion in Nov. 2011 to $2.55 billion last month, the research firm said in a new report. New hardware sales saw the steepest declines, falling 13 percent to $838.9 million, while software sales fell 11 percent to $1.43 billion, and accessory sales declined 8 percent to $280.9 million. These figures only include sales of new video game products, not digital, used, or rental game sales.
November marked the twelfth straight month video game sales have declined, but there are signs the industry is looking up.
"November had the smallest year-over-year decrease we have seen for dollar and unit sales so far this year," The NPD Group's industry analyst, Liam Callahan, said in a statement. "This is a sign of momentum going into the December holiday period."
He added that it's important to compare last month's results to Nov. 2005, which was the last time the industry began to transition between console generations with the launch of a new platform. Compared to sales figures seen in Nov. 2005, last month's results were nearly double.
T-Mobile To Sell ‘Apple Products’ in 2013
The CEO of T-Mobile's parent company confirmed today that T-Mobile US will sell "Apple products" in 2013. He would not confirm the specific products, but the iPhone and iPad are likely candidates.
"I'm glad we got an agreement. We're going as fast as we can with Apple to bring products to the market and deliver a great customer experience," Deutsche Telekom CEO Rene Obermann said.
The deal is clearly expensive for T-Mobile, although Obermann wouldn't break out its exact cost. T-Mobile is lowering its dividend from 70 eurocents in 2012 to 50 eurocents in 2013 and 2014. However, Obermann said the company as a whole would continue to be profitable and growing.
"I can't go into more details, I'm afraid; you'll have to make your own assumptions," Obermann said.
Report: Microsoft Slashes Orders for Surface RT Tablets in 2012
Facing lackluster demand for its new Surface RT tablets, Microsoft has reportedly slashed 2012 orders from its Asian manufacturers from 4 million to 2 million units.
The reportedly sluggish start for Microsoft's first ARM-based tablet might prompt it to lower the price of the Intel-based Surface Pro due out in January, according to DigiTimes. Citing unnamed supply chain sources, the paper said Friday that Surface RT orders have been halved through the end of December.
"While we have nothing new to share regarding supply or sales at this time, this report is inconsistent with comments Steve Ballmer made several weeks ago regarding Microsoft ramping up supply and distribution for Surface with Windows RT," a Microsoft spokesperson said in a statement. "As Steve mentioned, the reception to Surface has been 'fantastic,' which is why he also stated that 'soon, it will be available in more countries and in more stores.'"
The other makers of Windows RT-based tablets—Asus, Samsung, and Dell—are also experiencing "weak" consumer demand for those devices, according to DigiTimes.
The Taiwanese tech site said sources suggested that Microsoft might be considering bringing out its x86-based Surface Pro before the end of the year, instead of in January.