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Microsoft sales tumble from quarterly high

Prepping for recession

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Microsoft's put a brave face on its first-quarter results one year after trumpeting its best performance in eight years.

The company Thursday fell back to highlighting its un-sexy multi-year licensing agreements with big customers as proof its business is sound and can endure a recession and netbooks onslaught, as it saw software sales tumble.

For the three months of fiscal 2009, Microsoft reported net income of $4.37bn on sales of $15.06bn, an increase of nine percent and two per cent respectively.

That compares to the first quarter of fiscal 2008 where net income and sales jumped 23 per cent and 27 per cent to $4.2bn and $13.76bn respectively - the fastest first quarter since 1999. Kevin Johnson, president of the platform and services division at the time, cited robust demand for premium editions of Windows Vista.

For further context on where Microsoft is right now, compare this quarter's results with the quarter reported in July. Revenue fell nearly five percent and net-income was flat compared to the July quarter.

The company's Windows client business grew by half its anticipated target - two percent instead of four compared to last year. Microsoft said fewer traditional PCs and more netbooks had shipped than expected. Also, revenue from OEMs was down as they shifted to sell cheaper netbooks.

Netbooks running Windows mean growth but relatively low income as they do not run money spinning versions of Windows, like Windows Vista Premium Edition. Microsoft said it was too early to say how much netbooks are cannibalizing traditional sales.

The good news for the current quarter? Microsoft at least hit the diluted earnings per share guidance - $0.48, which compared to last year's EPS of $0.45. Microsoft also exceed its own expectations on revenue for this quarter, having forecast between $14.7bn and $14.9bn.

With the economic climate in mind Microsoft revised its full-year guidance. Microsoft now expects earnings per share between $2.00 to $2.10 on revenue between $64.9bn and $66.4bn compared to the previously stated $2.12 and $2.18 per share, and revenue of between $67.3bn and $68.1bn.

Chief financial officer Chris Liddell said Microsoft was assuming anywhere between a "mild recession" and a "deeper recession" that would impact IT spending. ®

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Latest Comments

remember...

Microsoft would rather have you pirate windows than use an OS from the competition...

They'd rather have any XP sales on netbooks than customers getting Linux...

Reckon them steep discounts to the OEMs to get them to put XP on them thar netbooks instead of Linux are biting...

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0

How could you have got it so wrong?

'The Guardian's' Windows' Editor, Jack Schofield, says "Microsoft reports record first quarter on Windows Server and Office success."

Sorry, my mistake, that should read "'The Guardian's' Computer' Editor, Jack Schofield".

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BillyBoy jumped at the right time

... this economy malarky reminds me of a wonderful Tom Petty song:

FREE FALLIN'

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