Microsoft Revenue Suffers Historic Drop

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As analysts predicted it might, Microsoft on Thursday reported the company's first ever year-over-year sales decline for the quarter ended March 31.

The software maker said fiscal third-quarter sales totaled $13.65 billion, down 6 percent compared with $14.45 billion in the same quarter a year ago. Its per-share earnings were 33 cents per share, although that included severance charges that reduced earnings by 6 cents per share.

Analysts had been projecting sales of $14.15 billion and per-share earnings of 39 cents, down from 47 cents a year ago, according to Reuters Estimates.

Microsoft had said in January that the crystal ball for the company was cloudy and at the time announced its first companywide layoffs, with plans to chop 5,000 jobs over an 18-month period.

"While market conditions remained weak during the quarter, I was pleased with the organization's ability to offset revenue pressures with the swift implementation of cost-savings initiatives," Microsoft Chief Financial Officer Chris Liddell said in a statement.

The company noted that software sales to large businesses were stable during the quarter, but that weakness in server and PC sales hit its Windows, server and Office units.

Whereas Intel and EMC have been somewhat optimistic that things may have reached bottom last quarter, Microsoft's comments were less hopeful.

"We expect the weakness to continue through at least the next quarter," Liddell said.

The company didn't have much to say on several closely watched topics. The company did not give a specific sales or earnings outlook for the coming quarter, instead only noting what it expects as far as its operating expenses.

As for Windows 7, Microsoft just noted that it "remains on track for a fiscal year 2010 launch." That's even less specific than its usual comment, which is that it should ship within three years from general availability of Windows Vista, meaning by January. The software maker has been pushing to have Windows 7 out in time to be on PCs by this year's holidays, with recent indications that the company is still aiming for that goal.

By Ina Fried
  • CBSNews

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