• Financial Times et al., Friday, October 23, 2009 12:56 PM

Microsoft on Friday said its quarterly sales fell sharply year-over-year, which resulted in earnings of 40 cents a share for the quarter -- a decline of 17%. Still, everyone's thrilled because the software giant was able to beat Wall Street's expectations of 32 cents a share thanks to severe cost cutting, including some 5,000 projected layoffs.

"Not wonderful, but it's better than analysts were expecting," writes Engadget.

"Well, well, well," remarked Kara Swisher on her BoomTown blog, "That financial imp at Microsoft -- CFO Chris Liddell -- pulled a fast one on Wall Street and turned in first-quarter earnings that blew away all estimates and even whisper numbers."

"The numbers are great," Jeff Donlon, an analyst at Manning & Napier Advisors Inc. (which manages more than $20 billion, including Microsoft shares), tells Bloomberg. "Reducing operating expense by about a further $400 million is indicative of more prudent investment on the part of the company."

Added Sid Parakh, an analyst at McAdams Wright Ragen in Seattle: "They can't manage revenue, but they can manage the bottom line ... They've been pretty good about costs in the quarter. Everybody is more cautious on spending."

What's more, Microsoft's earnings "added to the view that recovery is taking hold across the technology sector," reported the Wall Street Journal.

Still, said the Financial Times: "In spite of its recent innovations, Microsoft has suffered in the past year from slimmer PC sales as companies and consumers retrench during the recession."

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