Tech giants Microsoft are in hot water over their new tablet, the Surface RT; namely their financial reporting. Although technologically impressive and a comparable product to the Apple iPad, Microsoft’s latest offering did not exactly fly off the shelves. Low sales and failed expectations led Microsoft to write down about $900 million. The class-action lawsuit claims Microsoft committed fraud by falsely reporting information to their investors. The earnings report in the fourth financial quarter of 2013 was, in simple terms, not good.
The class-action lawsuit, originating in Massachusetts, names the corporation itself as well as a few high-ranking executives. Microsoft unsurprisingly held to their guns and re-affirmed their faith in other Windows devices. Steve Ballmer, the CEO of Microsoft, stated that while there has been a noticeable hiccup with the Surface, they are still enjoying the success of Office 365, Windows Azure, Xbox LIVE, and Skype. Many question whether classifying the loss as “Inventory Adjustments” related to the tablet will calm the waves caused by the erasing of $30 billion in market share. Counter-arguments to the lawsuit include the idea that Microsoft was accurate with their predictions, but simply miscalculated how well the product was going to perform.
Microsoft has always been a company that likes to throw it’s name into the hat, which is part of the reason they have been so successful. Back in 2001, many assumed the launch of the Xbox would be a total disaster, and now the Xbox 360 has sold about 85 million units worldwide (at a price tag of $299-$399). Unfortunately for Microsoft, for every Xbox, there is also a Zune; this was supposed to be the answer to the Apple iPod, however critics were not impressed. For an industry leader, Microsoft often gets a lesser shake when it comes to the big “Apple vs Microsoft” conversation, with most people more interested in the “Google vs Apple” discussion. Regardless, many feel that this class-action lawsuit will lead to a settlement, which Microsoft can more than afford.