Microsoft Corp. (MSFT:US) shares fell 9.3 percent after reporting that sales slumped in China and Japan and a stronger U.S. dollar curbed sales of business-software licenses.
Commercial-licensing revenue fell to $10.7 billion in the period that ended Dec. 31, the world’s largest software maker said Monday in a statement. Analysts on average had projected $10.9 billion, based on a survey conducted by Bloomberg. Unearned revenue, a measure of future sales, was $21.2 billion, compared with estimates of $21.8 billion. The stock dropped to $42.66 at the close in New York, the biggest one-day decline since July 2013.
As Satya Nadella approaches his first anniversary as chief executive officer, Microsoft’s traditional business-software unit is being hurt as customers switch from licensed programs to its Internet-based products, and as a corporate push to replace Windows XP tapers off. The disappointing sales in the company’s biggest division marred a quarter in which total revenue topped estimates, helped by strong growth in its cloud software and Xbox video-game console.
“Even though they beat on consumer and devices, it was a slight miss on the commercial side,” said Daniel Ives, an analyst at FBR Capital Markets & Co. “That gives you a B-plus quarter where some investors were looking for an A-minus.”