Surface Revenue, Redux

In about an hour, Microsoft will release the results of its most recent quarter, the first quarter of its fiscal 2015. The company is expected to report revenue of $22 billion, and earnings per share between $0.49 and $0.55, depending on which set of averaged estimates you trust.

That will all come shortly. For now, let’s talk about Surface.

Last quarter I was slapped in the face by my failure to realize that Surface Pro 3 revenue, for the large part, would not be recorded until the quarter to be reported today. That complete misstep led me to overestimate how much top line the Surface device family would generate, and thus lose two beers to Valleywag’s Sam Biddle.

In the sequentially preceding quarter, Surface had revenue of $409 million. That was, as you will note, below my $500 million expectations.

So here’s a rough tally to help keep today’s new figure in place for the period:

  1. <$500 million in Surface revenue: Holy shit, what the fuck.
  2. $500+ million Surface revenue: A weak-ish quarter, but not the end of the line.
  3. $600+ million: Moderate-good quarter, shows that the Pro 3 is selling.
  4. $700+ million: Good quarter.

Anything more is gravy. The jump from $500 million to $600 million might seem more moderate than I’m making it out to be, but keep in mind that every $100 million chunk is a ~25 percent gain on the sequentially preceding quarter’s total.

There is a lot at play here: The cancellation of the Surface Mini, the clear-out-the-revenue sale of old Pro 2 models, and the slow-fade of the Surface 2 are all factors. I’ve tried to take all that into account. Your estimates will vary.

In the first calendar, third fiscal quarter of this year (2014), Surface had revenue of $500 million or so. Surely Microsoft hopes to beat that figure with its new and better-received Pro 3 device.

Earnings time ticks closer, so we’ll know soon enough. Strap in!