October 23, 2009

Microsoft Reports Profit Decline

Microsoft posted an 18 percent decline in profits in its recent quarterly earnings, but the company beat out analyst expectations.

Additionally, the company reported that its sales last quarter were valued at $12.9 billion, which represents a 14 percent drop from $15 billion during the same quarter in the previous year.

Microsoft said the drop in earnings was attributed to its decision to allow PC buyers to upgrade to its newest operating system, Windows 7, when it became available this week.

The free upgrade program is set to expire in January 2010.

If the company had not decided to offer free upgrades to new PC owners, its earnings would have risen by 8 percent compared to last year.

News of the company's quarterly earnings sent shares to a 52-week high, up 7.5 percent ($1.99) to $28.58 in morning trading.

Earnings are expected to increase next year as analysts believe business purchases of new PCs and software will be up again in mid-2010.

Microsoft raised its earnings per share by starting to purchase its own stock after a six-month period of no purchases.

According to the Associated Press, Microsoft has been cautious about higher sales expectations, but other companies, like Intel, have said they expect sales to rise in the current quarter.

Microsoft told analysts it expects its expenses in the current fiscal year to be as much as $400 million lower than previous estimates, due to cost-cutting efforts which included employee layoffs.


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