Watch Windows in Microsoft Earnings

NEW YORK (TheStreet) -- The media fixated on a pseudo-historic aspect to Microsoft's(MSFT) fourth-quarter earnings report yesterday, and in the process often failed to make a proper distinction about what actually matters going forward.

The Associated Press was typical, running the headline: "Microsoft reports first loss as public company." The better part of the article revolved around Microsoft's $6.2 billion write-off of a failed online-advertising business they once hoped would allow it to compete with Google(GOOG) .

So much for that. But in what actually matters going forward, The AP and others reported that Windows revenue was down 13% in the quarter.

Microsoft's foray into Google's territory is a small portion of their business. If Windows is down 13% their goose is cooked. But a drop that big sounds unreasonable, even with slowing PC sales. So is it right? Is it real? The AP, so busy focusing on the highly anticipated and relatively meaningless write-off, doesn't deign to say.

The New York Times sets us straight: "Windows sales looked worse than they really were in part because Microsoft had to change how it recognized that revenue because of an offer it has extended to people who buy PCs running Windows 7."

It adds: "If Microsoft had not had to defer a portion of its Windows sales -- $540 million in this case -- its Windows revenue would have declined 1 percent, still a dismal performance that underscores the challenges in the traditional computer business right now."

Got that? When it comes to Microsoft, it's Windows that matters. And while Windows sales were certainly bad, they were not as dismally bad as some in the media focused on and not as bad as the flashy notion of a "historic loss" would lead you to believe.

At the time of publication, Fuchs had no positions in any of the stocks mentioned in this column.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.