(CNNMoney.com) -- Microsoft Corp. said Thursday that declining PC sales hurt revenue, as the software giant reported quarterly sales that fell for the first time in its 23-year history as a public company.
The Redmond, Wash.-based company said sales fell 6% from a year earlier to $13.7 billion, missing analysts' expectations of $14.1 billion.
Meanwhile, the company's 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.
Microsoft said weakness in the global PC market negatively impacted its results.
Still, shares of Microsoft (MSFT, Fortune 500) rose 4% after hours, as the company performed roughly in-line with expectations. In the previous quarter, results came in well below forecasts, and Microsoft rescinded its prior outlook for 2009.
"Expectations were much more tempered now," said Katherine Egbert, analyst with Jefferies & Co. "People now understand that near-term business won't be so good."
On a conference call with analysts, Chris Liddell, Microsoft's chief financial officer, said the current recession has been "the most difficult economic environment we've faced in our history." He noted that he expects the recovery to be slow and gradual, but again he declined to give a specific outlook for the next three-month period.
Still, Liddell said he was encouraged by the company's ability to cut costs.
"While I can't be happy in any quarter in which our revenue and earnings per share decrease, I'm pleased with our relative performance," he added.
Demand quagmire: The company has had a difficult time combating slumping demand for its Windows operating system, as the economic slowdown has dragged PC sales down 7% to 9%, according to Microsoft's estimates.
The recession has also prompted many consumers to opt for cheaper, scaled-down "netbooks" that perform only basic tasks such as e-mail and accessing the Internet. They typically run a lower-cost version of Windows or an open-source operating system such as Linux.
"The trouble for Microsoft is that its cash cow is shifting," said Carl Howe, analyst with Yankee Group. "PC sales are troubled, and they're getting hurt by the move to cheaper notebooks."
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.
"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 Liddell. "We expect the weakness to continue through at least the next quarter."
Sales and profit fell in all of Microsoft's businesses, except its server business, which managed to squeeze out a 7% rise in revenue and a 24% jump in earnings. The entertainment and devices division, which includes the Xbox 360, suffered a 2% revenue decline and an operating loss of $31 million from a year earlier. The company's business division sales dropped 5%.
Read more here
Thursday, 23 April 2009
Subscribe to:
Posts (Atom)
