Microsoft profit sinks 32% on weak PC sales
Software giant revenue and earnings miss estimate as PC sales slip, but manages to meet analyst's tepid estimates.
By David Goldman, CNNMoney.com staff writer
April 23, 2009: 4:35 PM ET
NEW YORK (CNNMoney.com) -- Microsoft Corp. said Thursday that declining PC sales hurt revenue as the company reported a quarterly profit that met Wall Street estimates.
The Redmond, Wash.-based software giant said its net income fell 32% to $2.98 billion, or 33 cents per share, in its third quarter ended March 31.
Results included charges totaling 6 cents per share for job cuts and investments that took place in the quarter. Without the charges, Microsoft earned 39 per share, in line with forecasts by analysts polled by Thomson Reuters, which typically exclude one-time items.
Sales fell 6% to $13.7 billion, missing analysts' expectations of $14.1 billion.
Microsoft said weakness in the global PC and server markets negatively impacted its results. Shares of Microsoft (MSFT, Fortune 500) rose 3% after hours.
The company has had a difficult time combating slumping demand for its Windows operating system, as the economic slowdown has dragged PC sales down and prompted many consumers to opt for cheaper, scaled-down notebooks that perform only basic tasks like e-mail and accessing the Internet.
"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," said Microsoft finance chief Chris Liddell, in a statement. "We expect the weakness to continue through at least the next quarter."
In January, Microsoft announced its first mass job cuts in its 34-year history in an effort to bolster its bottom line The company slashed 1,400 position during the quarter with another 3,600 expected to be cut by mid-2010. At that time, the company said it was also adding a few thousand positions, mainly in its online advertising division.
Microsoft has continued to struggle to compete with rivals Google (GOOG, Fortune 500) and Yahoo (YHOO, Fortune 500) in the online advertising business. Microsoft's Online Services division, which includes the online portal MSN and its Internet advertising sales, posted another loss in the latest quarter.