• PaidContent.org, Friday, April 24, 2009 11:45 AM

Microsoft reported the first quarterly drop in revenue in its history on Thursday, also falling short of analysts' expectations.

The software giant posted net income of $2.98 billion, down a hefty 32% from the $4.4 billion recorded during the first quarter last year. However, this included a 6 cents per share one-time charge due to severance payments and investment impairments. Revenue fell 6% to $13.65 billion, from $14.45 billion a year ago. Analysts were expecting revenue or $14.1 billion. Microsoft's previous worst year-over-year performance was a 0.7% increase in revenue in 2000.

Relatively speaking, the company's online services division fared worse, reporting a 14% drop in revenue to $721 million, compared to $843 million a year ago. Microsoft said that online advertising revenue had plummeted 16% to $521 million due to a fall in display advertising. Analysts, meanwhile, had actually been expecting an increase in online sales. Instead, losses in the division more than doubled to $575 million.

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