Microsoft Earnings Down As It Prepares Major Product Updates
Marking Microsoft's only second consecutive down quarter ever, the software giant on Thursday reported $13.10 billion in revenue during the fourth quarter -- a decline of 17% from $15.83 billion.
The poor earnings come at a critical time for Microsoft as it prepares to roll out updates to nearly every one of its major products in fiscal year 2010. The Redmond-based company shocked the industry last quarter when it reported a 6% year-over-year revenue decrease, from $14.45 billion down to $13.65 billion -- its first-ever year-over-year revenue decline.
On Thursday, Microsoft reported net income of $3.05 billion, or 34 cents a share, for its fourth quarter, which ended June 30 -- down sharply from the $4.30 billion, or 46 cents a share, it earned in the fourth quarter a year ago.
"Our business continued to be negatively impacted by weakness in the global PC and server markets," said Chris Liddell, chief financial officer at Microsoft.
For the full year, Microsoft posted a 3% decline in revenue to $58.44 billion, along with an 18% fall in net income to $14.57 billion.
This time last year, Microsoft reported fourth-quarter 2008 revenue of $15.84 billion, and $60.42 billion for the entire fiscal year -- an 18% increase over the year before.
Microsoft's troubles are being attributed to the continued global recession and resulting poor PC sales. Gartner Research recently reported that worldwide PC shipments decreased 5% year-over-year in the second quarter of 2009.
"While economic conditions presented challenges this year, we maintained our focus on delivering customer satisfaction and providing solutions to our customers to save money," said Kevin Turner, chief operating officer at Microsoft. "I am very excited by the wave of product and services innovations being delivered in this next fiscal year."
Microsoft is preparing to launch new products such as Windows 7, Windows Server 2008 R2 and Office 2010.
Microsoft also recently debuted its own Bing search engine, and has reportedly reengaged Yahoo in talks to form a search partnership.
To weather the unprecedented downturn, Microsoft announced the first job cuts in its history in January, eliminating some 5,000 positions.
Looking ahead, Liddell was cautiously optimistic. "We generally expect the economic conditions to continue," he said regarding the short-term. Looking at 2010, he added, "We see the potential for improvement."