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ZDNet UK / News and Analysis / Business of IT / IT Strategy
Microsoft earnings hit by weak PC, server markets
NEWS
Microsoft on Thursday reported weaker-than-expected quarterly revenue and again declined to offer a forecast for the current quarter.
The software maker reported that for the three months ending on 30 June, the company earned $3.05bn (£1.8bn), or 34 cents per share, on revenue of $13.1bn. However, those results included legal and other charges, as well as the deferral of revenue related to a Windows 7 upgrade programme. In total, those charges cut into per-share earnings by four cents.
Analysts had expected per-share earnings of 36 cents, according to First Call. However the revenue figure was notably weaker than the $14.37bn analysts expected, even accounting for the Windows revenue deferral.
"Our business continued to be negatively impacted by weakness in the global PC and server markets," said Chris Liddell, chief financial officer at Microsoft. "In light of that environment, it was an excellent achievement to deliver over $750m of operational savings compared to the prior year quarter."
Investors were not pleased. In after-hours trading, Microsoft's stock dropped seven percent, or $1.90, to $23.66.
In a series of PowerPoint slides released along with its report, the company said the enterprise business remained relatively healthy, but hardware sales were weak. PC sales in particular dropped five percent to seven percent.
On the cost front, it said it reduced expenses by $800m more than the low-end of its plans. It also recorded $108m of 'impairments' related to a drop in value for some investments.
A Microsoft representative said the company is not announcing any new job cuts. It did discuss in its earnings report its previously announced programme to cut up to 5,000 jobs.
Microsoft did not give a sales or earnings forecast when it reported its last quarterly numbers in April. It did say it was seeing economic pressures that were both "broad and deep" — the worst in the company's 30-year history.
The results come just as the company wrapped up development of Windows 7, which was officially finalised on Wednesday and is due to go on sale on 22 October.
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