Fail to hit analysts’ expectations

Google and Microsoft have both failed to hit their projected revenue targets, according to the second quarter financial results of the two tech giants. Google reported $14.11 billion in revenue and a net income of $3.23 billion – below the 20% increase in revenue predicted by Morgan Stanley. Analysts are blaming the lower-than-expected earnings in a shift in how consumers use computers, moving from a one-screen-one-OS set-up to an experience based around multiple devices and mobile access. In a speech given during the earnings call CEO Larry Page said: “These kinds of changes don’t happen that often, once a decade, maybe even less frequently.” Despite a 16% increase in profits for the company compared with last year, as well as strong growth from advertising revenue – up 15% with YouTube reportedly upping payment to partners by 60% – Google’s investors are not overly enthused. The same appears to be the case with Microsoft, which announced revenue of $19.9 billion (a growth of 11%) with net income of $4.97 billion. The company also announced a $900 million charge for inventory writedowns related to the Surface RT (recently slashed in price to encourage sales) essentially declaring that its rival to the iPad has lost nearly a billion dollars in value following poor sales. Late last year Microsoft was reported to be building between three and five million Surface RT tablets, but has so far sold only 260,000 units (alongside 750,000 Surface Pros – a device offering a fuller experience of Windows 8).