Microsoft revenue drops – Blames weak PC and server markets
The recession, it seems, is now affecting even the largest companies in the world. And Microsoft is no exception. Faced with the economic downturn, and what is described as, “weakness in the global PC and server markets,” Microsoft announced its fourth quarter financial results, and they don’t make for positive reading.
In April, Microsoft announced its third quarter financial results, and these were important because they contained the company’s first ever year-on-year decline in revenue since it went public in 1986. Net income was also down, as was revenue from sales of the Windows operating system.
Those trends have continued, and possibly even got worse, for the fourth quarter of 2008/2009. Revenue for the quarter is $13.1 billion, a 17 percent drop from the same period last year. Net income fell to $3.05 billion, a 29 percent drop from the same period last year.
For the full 2008/2009 fiscal year, Microsoft’s revenue was $58.44 billion, a decline of 3 percent, while the company’s net income was $14.57 billion, representing a rather sharp fall of 18 percent. Wall Street reacted to these results with a drop in the share price of 7 percent to $23.70.
The last year has been a huge one for Microsoft, with Windows 7 coming together, as well as the new Bing search engine being unleashed on the Web. The company has also been cutting costs and staff in order to ease itself through the worst of the recession. Today’s results also include a deferral of $276 million of revenue associated with the Windows 7 upgrade option program.
It may look bad but it should be remembered that while the figures are all down on last quarter and last year, they still represent a significant profit for the company. Looking ahead, Windows 7 is due to be released in October, and that should, by most analysts reckoning, lead to a large number of PC upgrades, which is good news for Microsoft.
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