Microsoft has banner quarter despite recording negative earnings

Microsoft posted its first quarter of a net loss in its 26-year existence. A $6.2 billion charge from the pricey acquisition of aQuantive, an online ad agency made their quarterly earnings a net loss of $0.06. Analysts had been forecasting quarterly earnings of $0.62. The Hollywood Reporter writes, “Thanks to a massive $6.2 billion charge announced a couple of weeks ago, Microsoft on Thursday recorded its first quarterly loss in its 26-year history as a public company.”

Apart from their blighted acquisition, Microsoft performed well with above 20% growth in operating cash flow. In the earnings call, Microsoft’s CFO emphasized their core strength as a search engine and portal. They also mentioned customer service is at an all time high.

Microsoft’s major search engine is Bing, a meteoric second to Google’s dominance in the search market. Their products also performed very well, namely the Xbox become more of a household commodity, getting more usage with the advent of movie rentals and the like on its versatile gaming console.

When looking at the financial performance of Q4 apart from the spotty charge for the acquisition, it is clear Microsoft had a banner quarter with record revenues, operating cash flow and earnings per share. Investors rallied on the skewed news, shrugging off the aberration of its first negative earnings per share in company history.

Operating income was up 12% at $6.9 billion for the quarter. Cash flow from operations grew a significant 29% of $7.7 billion. It goes to show smart investors are more concerned with operating income and cash flow from operations. In addition, investors may feel the acquisition was still a good decision, despite it being cost prohibitive. Granted, Microsoft is strategizing itself for a gain in search advertising and advertising revenues.

Some of the brightest spots in their quarterly results include the following: Lync software growth of 45%; Windows enabled phones up 50% quarter over quarter; and 115 billion minutes on Skype, up more than 50%.