Microsoft suffers worse than expected 24% fall in profits

PanARMENIAN.Net - Microsoft has suffered a worse than expected 24% fall in profits, but chief executive Steven Ballmer countered by promising a "new era" for the world's largest software company as it prepares to fight for a share of the mobile computing goldrush with next week's launch of Windows 8, The Guardian reports.

Wall Street was braced for a contraction after news that PC sales were down 8% in a quarter as consumer spending switches from the desktop to tablets and phones.

Microsoft obliged by announcing a year-on-year fall in first quarter profits before tax from $7.3bn (£4.5bn) to $5.5bn and revenues of $16 billion, the lowest reported since March 2010. Income from its Windows division fell to $3.2bn, the worst performance in three years.

The best selling software's most radical redesign since Windows 95 has seen its interface reinvented for the touch screen, and its arrival today will be accompanied by the launch of the Surface tablet, Microsoft's answer to the iPad.

"The launch of Windows 8 is the beginning of a new era at Microsoft," said Ballmer. "Investments we've made over a number of years are now coming together to create a future of exceptional devices and services."

On Oct 29, Microsoft will make a concerted push into the smartphone industry with the unveiling of Windows Phone 8. Its arrival will be followed in November by new handsets using the operating system from Finland's Nokia and Taiwan's HTC.

It is an alliance that spans three continents, and to which the fortunes of all three companies are closely tied. Admitting the PC market was "challenging", Microsoft finance director Peter Klein said the company was preparing for the "largest launch wave in our history".

Revenues from other divisions have held up, with sales of servers and tools rising 8% to $4.5bn, while the Xbox games console helped revenues from entertainment and devices hold firm at $1.9bn.

The number of calls on Skype, the online phonebox acquired by Microsoft last year, rocketed 58% to 120bn minutes.

"Investors were not expecting a home run," said analyst Daniel Ives at FBR Capital Markets. "All expectations are on the launch of Windows 8 and the entrance into the tablet market. In light of the environment, the macro and PC situation, these are respectable numbers."