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Thursday, April 23, 2009

Windows Sales Off 16% As Microsoft's Reports Sharp Profit Decline

Faced with a slumping economy, new sources of competition, and a staple product that turned out to be a dud, Microsoft reported one of the worst financial quarters in its history.

The company said total revenue for its third fiscal quarter fell 6% year-over-year, to $13.6 billion, while net income, including $710 million in restructuring and investment charges, sank 32% to $3 billion. Earnings per share came in at 33 cents, compared to 47 cents in the year prior.

Microsoft earlier this year said it would cut 5,000 jobs to reduce costs. But it's more than market conditions plaguing the software maker's balance sheet.

Vista, the current edition of the company's core Windows operating system, has been met with jeers by corporate and home computer users alike. Surveys show that only a handful of large enterprises have upgraded their PCs from the older Windows XP OS to Vista.

Microsoft also didn't fare well in other areas during its third quarter. Revenue from Internet services fell 14%, to $721 million—a sign that the company is losing more ground to Google in the race for eyeballs on the Web and associated sales.

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