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Microsoft Is Getting Crushed For The Most Obvious Reason

Its fourth quarter was impacted by the decline in the PC industry.

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Shares of Microsoft are getting crushed in extended trading, dropping more than 4% after the company missed estimates for its fourth-quarter earnings.

The fairly obvious reason for the miss, according to the company, is that the consumer PC market is still “challenging.”

“Our fourth quarter results were impacted by the decline in the PC market, we continue to see strong demand for our enterprise and cloud offerings,” Microsoft’s CFO said in the earnings statement.

The company is also taking a $900 million charge related to “inventory adjustments” of the Surface RT, the cheaper version of its Windows 8-powered tablet.

Basically, Microsoft is also against the tidal wave of a PC business in decline. The company just completed a major reorganization in an attempt to transition it to a “devices and services” company that’s focused on its services and Windows-powered devices like the Surface.

Microsoft’s weak earnings come against the backdrop of a major deal battle going on over another PC company: Dell. The massive $24.4 billion fight pits founder Michael Dell and Silver Lake Partners against billionaire activist investor Carl Icahn. The former wants to take Dell private because they believe it will be easier to navigate the decline of the PC industry without the scrutiny of public markets. Icahn has challenged Dell’s offer, saying he believes Dell is undervalued.

The impact of the weak PC market on Microsoft’s earnings serve as more evidence that there are still plenty of challenges that remain in the declining PC industry.

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