Microsoft’s expansion into hardware pushes revenue up
Microsoft landed in the No. 2 spot in The Seattle Times’ 23rd annual ranking of publicly traded Northwest companies. Its strength and pervasiveness among corporations and other large organizations helped boost its bottom line.
Seattle Times technology reporter
Microsoft at a glance
CEO in 2013: Steve Ballmer (Satya Nadella named CEO on Feb. 4, 2014)
Employees in 2013: 99,000
What it does: Creates software, services and hardware
What sets it apart: Sheer size and breadth
2013 cash flow: $24.6 billion
2013 sales: $77.8 billion
Years in ranking: 23
Highest ranking: No. 1 (for 1991, 1992)
SEC filings, Bloomberg
Microsoft is one company that needs no introduction.
From its Windows operating system to Office productivity suite, there are few in the world who haven’t heard of the Redmond-based software giant.
In the past several years, though, the rap on the company was that it had fallen behind its competitors in key areas such as mobile and search — and its stagnant stock price reflected that line of thinking.
What some have overlooked, though, was that even in those years, Microsoft continued to log billions in revenue and profits.
Indeed, it was a strong year of sales that helped Microsoft nab the No. 2 spot in The Seattle Times’ 23rd annual ranking of Northwest-based publicly traded companies.
From Azure to Xbox One, Dynamics to Office 365, Microsoft’s breadth of offerings all contributed to a fiscal year that brought in $77.85 billion in sales and $21.86 billion in profit, and a calendar year that brought in $83.43 billion in sales and $22.83 billion in profit.
And, as usual, Microsoft’s strength and pervasiveness among corporations and other large organizations helped boost its bottom line.
But there was also a somewhat surprising factor that contributed to Microsoft’s jump in revenue last year: how well it did in consumer-hardware sales.
Among Microsoft’s various product categories, consumer hardware was the fastest growing in terms of revenue last year, said Sid Parakh, an analyst with Seattle-based investment firm McAdams Wright Ragen.
Certainly, the November launch of Xbox One — the long-awaited successor to the Xbox 360 gaming console — played a big role.
But so did the Surface tablet, Microsoft’s first branded computing device. The second generation of the device, launched in October, helped boost Surface sales to $893 million in the last quarter of calendar 2013, double the amount from the preceding quarter. Parakh characterized Surface sales as showing solid growth last year.
Such growth, however, comes with the caveat that Microsoft launched the Surface line of tablets only in October 2012, so any percentage growth could be seen as a big jump. In addition, the company took a nearly $1 billion write-down on one version of the first generation Surface last year.
And the gap between Microsoft and competing iPad and Android devices is evident in that, despite stronger sales, the Surface has not made make a big dent in the tablet market, and Microsoft lost money with each Surface tablet it sold.
The one area where sales did not do so well was the one that Microsoft is perhaps best known: Windows, whose revenue was down last year.
“There was strength across the board except for Windows,” Parakh said.
In 2014, Microsoft so far has continued to show strength among both its commercial and consumer customers. Its new CEO, Satya Nadella, has generated positive buzz and its stock price is among the highest it’s been in a decade.
Janet I. Tu: 206-464-2272 or email@example.com. On Twitter @janettu.