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July 23, 2009

Microsoft News - Microsoft Sees First-Ever Decline in Revenues with 17 Percent Skid

By Michael Dinan, TMCnet Editor

Succumbing to a down economy that’s slowed the PC sales that carry its flagship products, world’s largest software maker announced that it saw revenues decline 17 percent year-over-year for the three-month period that ended June 30.

Days after pulling the plug on its IP-PBX (News - Alert) offering for small- to medium-sized businesses, officials at Microsoft Corp. said the $13.1 billion in revenues for the fourth quarter yielded a net income of $3.05 billion and earnings per share of 34 cents – declines of 29 percent and 26 percent, respectively, from the year-ago quarter.
Chris Liddell, chief financial officer at Microsoft (News - Alert), said the Redmond, Wash.-based company’s PC and server businesses especially have been hurt by this down economy.
“In light of that environment, it was an excellent achievement to deliver over $750 million of operational savings compared to the prior year quarter,” Liddell said.
Wall Street apparently doesn’t feel that way.
Revenues fell short of analysts’ expectations and shares of the company – which saw its revenues fall for the first time since it went public in 1986 – fell a staggering $2, or 7.8 percent, in after-hours trading.
What hurt Microsoft the most appears to be falling sales for Windows, Office, Xbox 360 and Web advertising. Those areas largely reflect slowing PC sales – a trend that many attribute to the rise of “netbooks,” which are smaller, less expensive versions of PCs that are optimized for Internet use. Even the company’s server software group saw sales fall off.
The company says it’s expecting operating expenses of $26.6 billion to $26.9 billion for the full year ending June 30, 2010.
Kevin Turner, chief operating officer at Microsoft, said that while the economy worsened, “we maintained our focus on delivering customer satisfaction and providing solutions to our customers to save money.”
“I am very excited by the wave of product and services innovations being delivered in this next fiscal year,” Turner said.

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Michael Dinan is a contributing editor for TMCnet, covering news in the IP communications, call center and customer relationship management industries. To read more of Michael's articles, please visit his columnist page.

Edited by Michael Dinan

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