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Microsoft revenue drops 14% in summer

updated 09:20 am EDT, Fri October 23, 2009

Microsoft faces third quarterly decline

Microsoft today reported its third consecutive decline in quarterly revenue. The company's total revenue during the summer dropped a sharp 14 percent year-over-year to $12.92 billion and is attributed almost exclusively to the Windows division, whose own revenue fell 38.76 percent to $2.62 billion. It also saw a decline in the overall health of its Business and Online Services groups.

The Entertainment and Devices group, which handles Windows Mobile, Xbox and Zune development, declined very slightly in revenue to count for $1.89 billion but is one of the few highlights of the summer and nearly doubled its net income to $312 million. The boost is likely to be fueled by stronger sales of the recently price-cut Xbox 360 as well as early sales of the Zune HD.

The software developer claims that the revenue decline doesn't entirely reflect its actual performance. As accounting rules have dictated that the company defer the revenue from any Windows 7 pre-orders bought between July and September, about $1.47 billion in revenue had to be omitted from the company's books. Including it in the firm's results nonetheless still results in a four percent from a year ago to $14.39 billion.

Microsoft chief financial officer Chris Liddell says that, despite the loss, the firm is "very pleased" with the results as they show a strong demand for the just-launched Windows 7 and that the company's extensive cost and job cuts early in the year have had an effect. Microsoft's actual net income was still significant at $3.57 billion.

Ahead of the release, CEO Steve Ballmer had warned that Microsoft would only see a slight sales boost from Windows 7 and so doesn't expect the software to immediately restore fiscal health. Guidance in the results reflects the cautious point of view and now has Microsoft lowering its expected annual revenue from $26.5 billion to $26.2 billion for its full fiscal year, which ends June 30th.

by MacNN Staff



  1. iphonerulez

    Joined: Dec 1969


    Stock shot up and investors are happy...

    with Microsoft, but nothing compared to investors love for Amazon. Now that is what I call serious investor love. Made Apple investors look like pikers. How the heck does an online store make that sort of money? Yet Apple online store operates at breakeven. I still can't figure that out.

  1. Feathers

    Joined: Dec 1969



    I never thought that a company the size of Microsoft could actually be facing a bleak future but rather than suffering from a single catastrophic event (like nVidia's bad chips debacle), Redmond actually appears to be dying the slow death of a thousand cuts. I can't understand how shareholders can remain happy with the existing management.

  1. Paul Huang

    Joined: Dec 1969


    Surprise, surprise

    Why mess with MSFT's notoriously complex Windows upgrades when users already know that they could pick up a new computer and leave the old Vista junk behind? Result? Defection to Mac, summer slump, and record final quarter of 2009 (maybe).

  1. JeffHarris

    Joined: Dec 1969


    Nice try @ positve spin

    Regardless of the actual W7 preorder numbers (real vs. invented) and sponsored positive "reviews", it really remains to be seen how much of a "success" W7 will be. Surely if it beats Vista sales numbers MS will spin it as some kind of second coming. There is a funny YouTube video showing a W7 demo on a national TV show. Needless to say, it was a pretty dismal failure and the hosts are laughing, making jokes and disparaging remarks.

  1. slapppy

    Joined: Dec 1969


    Cash Cows

    Just let those cash cows do their job for a few quarters. It's not their "innovation" thats going to profit MS, it's their cash cows that keeps feeding their billions and billions of dollars, money losing products.

  1. Wingsy

    Joined: Dec 1969


    What were they thinking?

    Don't understand MS shareholder's thinking. Revenue drops 14% and the stock goes up 9%? I know they were expecting a greater drop in rev, but really, 14% is quite a chunk. Even when Apple exceeds analysts' expectations their stock sometimes takes a serious hit. MS shareholders must be really desperate for some bad news versus some really bad news.

    Every MS shareholder needs to look at this video that's making the rounds today. They need to know what they are investing in.

  1. robttwo

    Joined: Dec 1969


    And yet...

    That idiot Ballmer keeps his job. Does it bother anyone else that such an incompetent boob makes the kind of money he does??

  1. Monde

    Joined: Dec 1969


    Apl had to get the growth from somewhere

    Apple had to get it's increase in market share from somewhere. Thank you MS for doing such an incompetent job! Ballmer is the best thing that ever happened to Apple, may he reign supreme at big Redmond for another two decades. By then, they should be fighting for double digit market share. Anyone see those quad core iMacs? Sweet!

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