SEATTLE The personal computer business has been in its worst downturn since the industry's inception, but Microsoft has shown a knack for finding ways to insulate itself. Until now.
On Thursday, the company missed Wall Street forecasts, blaming the declining PC market for the shortfall. Microsoft also acknowledged the disappointing sales of one of its most prominent products, its Surface RT tablet computer, by taking a $900 million charge to reflect unsold inventory of the device.
"It finally caught up to them," said Colin Gillis, an analyst at BGC Partners. "We've been in a PC recession for five quarters."
For the fiscal fourth quarter that ended June 30, Microsoft, which is based in Redmond, Wash., reported net income of $4.97 billion, or 59 cents a share, in contrast to a loss of $492 million, or 6 cents a share, in the period a year earlier. Last year, Microsoft took a $6 billion write-down on a soured acquisition, wiping out its overall profit.
In the latest quarter, revenue rose 10 percent, to $19.9 billion, from $18.06 billion a year earlier.
Those results fell well short of the average analyst estimates compiled by Thomson Reuters of 75 cents a share in profit and $20.73 billion in revenue.
Revenue from Microsoft's Windows business, which includes its Surface tablet computers, rose 6 percent, to $4.41 billion. But without including the favorable impact from an upgrade offer last year, Microsoft's Windows revenue fell 6 percent in the quarter.
Mobile devices have sapped much of the gusto out of the PC market. Many people are buying tablet computers, especially Apple's iPad, instead of PCs to watch movies, surf the Web and write emails.
"We know we have to do better, particularly on mobile devices," Amy Hood, Microsoft's chief financial officer, said.
Investors had become bullish on Microsoft's ability to navigate the PC market's disruption, sending its shares up more than 32 percent this year. But after the release of its financial results, shares of Microsoft dropped more than 6 percent in after-hours trading. They ended regular trading at $35.44, down 30 cents.