Microsoft Revenue Drops, First Time in Its Existence

For the first time in its history, Microsoft has experienced a year-over-year drop in revenue. The Redmond company's revenue took a tumble in the third quarter of 2009 and amounted only to $13.65 billion. The $13.65 billion in revenue for the quarter ended March 31, 2009, represents a decline of 6% compared to the same quarter of 2008. The software giant is obviously not immune to the global economic downturn, but Q3 2009 just deepens the hits taken, with the first punches having landed concomitantly with Q2 2008 results.

“With our continued R&D investment and our broad suite of products and services, we remain in a great position to compete and gain share in the marketplace,” explained Kevin Turner, chief operating officer at Microsoft. The Redmond company reported operating income of $4.44 billion, a jump of 3% over Q3 2008. Net income dropped 32% to just $2.98 billion compared to the same quarter of the prior year, while diluted earnings per share are down to $0.33 per share, having declined 30%.

Microsoft emphasized that the stream of revenue from enterprise customers remained constant, and that the decrease in revenue was associated with the weak global PC and Server markets. In this regard, the software giant indicated that the Client, Microsoft Business Division, and Server & Tools were all impacted negatively by the global economic crisis.

Moving forward, the Redmond company continues to cook Windows 7 and Windows Server 2008 R2. The Release Candidate builds for both its server and client flavors of the platform are just around the corner, expected to become available to the public for download on May 5, 2009. It also indicated that it had reached development milestones with Office 2010 (Office 14) and Windows Mobile.

“While market conditions remained weak during the quarter, I was pleased with the organization’s ability to offset revenue pressures with the swift implementation of cost-savings initiatives,” added Chris Liddell, chief financial officer at Microsoft. “We expect the weakness to continue through at least the next quarter.”

For Q3 2009 Microsoft paid no less than $290 million of severance charges as part of its January 2009 plan to let go over 5,000 workers. In addition, the software giant also accounted for $420 million of impairments to investments.