According to Forbes.com, Google's problems stem from the rise of the mobile Web, for which ads cost 40 percent less than their desktop counterparts. Overall, ad prices fell by 6 percent, which is worse than the 3 percent analysts initially predicted. That's on top of a 4 percent drop ion the first quarter of 2013.
Microsoft, meanwhile, saw its profits take a major hit as a result of a $900 million inventory adjustment for a backlog of Surface RT tablets. Wall Street had expected Redmond to post earnings of $0.75 per share and $20.7 billion in revenue. Instead, the Windows-maker reported earnings of $0.59 per share and revenue of $19.9 billion. Without the Surface RT charges, Microsoft may have hit Wall Street's predictions. Also impacting Microsoft's earnings potential was the poor sales performance of the company's Windows 8 operating system. Still, Microsoft's $19.9 billion in revenue was higher than the $18.1 billion it posted in the same quarter a year ago.
“While 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, resulting in a record unearned revenue balance this quarter," explained Microsoft Chief Financial Officer Amy Hood. "We also saw increasing consumer demand for services like Office 365, Outlook.com, Skype, and Xbox LIVE."
Microsoft head Steve Ballmer said the company was working to, "compelling new devices and high value experiences from Microsoft and our partners in the coming months, including new Windows 8.1 tablets and PCs.”