Microsoft announced a $900 million "inventory adjustment" charge for its Surface RTs, parts and accessories on July 18. That write-down completely overshadowed the performance of the rest of the products and services that contributed to the company's Q4 2013 earnings.
(Among those overshadowed was Office 365 -- the Microsoft subscription service via which it provides Office client and hosted Office server apps. Office 365 is now on a $1.5 billion run rate, up from the $1 billion run rate it hit in Q3 FY2013. Another that got eclipsed: Windows Phone -- plus Android patent licensing --increased $222 million for the quarter.)
The biggest question, to my mind, about today's unexpected Surface RT write-down is how did Microsoft find itself in this predicament in the first place? How did officials seemingly misestimate the number of Surface RTs they should have made and how much they should have charged for them?
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