Microsoft profits fall 32pc in tricky third quarter

24 Apr 2009

Microsoft expects market weakness to continue through the next quarter, after it announced a 32pc decline in net income and a 6pc fall in revenues of US$13.65bn.

Last night’s financial results from Microsoft included US$290m of severance charges associated with its plan to axe 5,000 positions and US$420m of impairments to investors.

Combined, these two charges reduced earnings per share by US$0.06.

The company said that revenue in its Client, Microsoft Business Division, and Server & Tools was negatively impacted by weakness in the global PC and Server markets. Revenue from enterprise customers remained stable during the quarter.

“With our continued R&D investment and our broad suite of products and services, we remain in a great position to compete and gain share in the marketplace,” said Kevin Turner, chief operating officer at Microsoft.

“During the quarter, Microsoft released the beta version of the Windows 7 operating system, which remains on track for a fiscal year 2010 launch. Development milestones were achieved on other products including Microsoft Office 2010, Windows Server 2008 R2 and Windows Mobile.”

“While market conditions remained weak during the quarter, I was pleased with the organisation’s ability to offset revenue pressures with the swift implementation of cost-savings initiatives,” said Chris Liddell, chief financial officer at Microsoft. “We expect the weakness to continue through at least the next quarter.”

By John Kennedy

Pictured: Microsoft’s corporate campus, Redmond, Washington

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years