Video: Microsoft revenue down, cost-cutting up staff and news service reports
updated 4/24/2009 10:51:00 AM ET 2009-04-24T14:51:00

Microsoft Corp. on Thursday posted the first decline in quarterly revenue in its 23-year history as a public company, but met Wall Street's lowered profit forecasts.

The world’s largest software maker said its quarterly profit dropped 32 percent to $2.98 billion, or 33 cents per share, from $4.39 billion, or 47 cents per share, a year earlier.

Revenues in the fiscal third quarter ended March 31 slipped 6 percent to $13.65 billion from $14.45 billion in the same period last year.

The results illustrated the toll the recession has taken on the company, even though Microsoft remains one of the richest and most profitable companies. In January, the Redmond, Wash.-based company said it needed to resort to its first mass layoffs, cutting 5,000 jobs.

Microsoft's results included a $290 million one-time charge for expenses from the previously announced layoffs, plus a $420 million one-time charge for investments that lost value. Without those charges, the company said it would have earned 39 cents per share for the quarter.

( is a joint venture of Microsoft and NBC Universal.)

Analysts surveyed by Thomson Reuters expected profit of 39 cents per share. Sales, however, fell short of analysts' expectations of $14.1 billion.

Microsoft Chief Financial Officer Chris Liddell said the company expected weakness to continue at least through the end of June.

“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,” Liddell said in a statement.

Microsoft makes most of its profit selling the Windows operating system and business software such as Office. Those divisions were hurt when PC shipments fell for the second straight quarter as consumers and businesses sharply cut back on technology spending.

The Windows division's revenue sank 16 percent to $3.4 billion, while the division that makes Office saw sales drop 5 percent to $4.5 billion.

The company said it expected operating expenses for the fiscal year ending June 30 to be between $26.7 billion and $26.9 billion, less than it had forecast the previous quarter. Microsoft has not offered earnings or revenue guidance for the fiscal year, citing the volatile economy.

This reports contains information from The Associated Press and Reuters.


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