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Microsoft Q1 sales pays price for Win 7 launch

Though not as much as expected

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Microsoft's first quarter was not as bad as expected, but still pretty bad compared to a year ago.

The company saw revenue for the period fall to $12.92bn compared to $15.06bn in the first three months of 2008.

For the first financial quarter ended September 30, Microsoft made operating income of $4.48bn, versus $5.99bn in 2008.

Microsoft said the figures reflect the deferral of $1.47bn in revenue relating to Windows 7 upgrades and sales of the software to OEMs before general release.

If that deferred revenue was added back, total revenues would have been $14.39, down 4 per cent on the year.

Nevertheless, the results beat analysts' expectations and MS shares are expected to rise in early trading.

Revenues by segment reveal that server and tools revenue was almost flat, Windows and Windows Live fell from $4.28bn last year to $2.62bn this year and online services revenue fell to $490m from $520m. The online services division made a loss of $480m and "Corporate-level activity" led to a loss of $959m.

The entertainment and devices division, X-box et al, was the only business to increase profits to $312m for the quarter, up from $159m last year.

There's more here.

The company also said it is cutting expected costs for the year ahead by $300m to $26.2bn for year ending 30 June 2010. ®

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