Microsoft profits down by a third

Xbox profits down 66 per cent on last year
Xbox profits down 66 per cent on last year

Microsoft has reported its financial results for April to June 2009, with profits down a third compared with the same period last year – notably worse than market analysts were expecting.

And by 'a third' we mean, in real cash terms, a cool £1.9 billion. With overall revenue down 17 per cent on last year.

Microsoft is feeling the brunt of the recession, simply because fewer people and businesses are buying new PCs with new Microsoft operating systems on them.

"Until the job market picks up, companies need less computers and the recession means they're not as likely to upgrade them to new PCs complete with a shiny new license for Microsoft Windows," as Benjamin Cohen notes over on Channel 4 news.

Indeed the only 'booming' sector of the PC market is currently in low-cost netbooks – most of which run older versions of Windows or Linux. Additionally, what with the imminent arrival of Microsoft Windows 7 OS this coming October, consumers have no doubt been holding back on investing in a new Windows PC.

Xbox profits down

Notably, the Entertainment and Devices division is one of the worst hit - having took a 66 percent profit drop in profit for the overall 2009 fiscal year, with revenue down $161 million this year, mainly down to aggressive price-cutting on consoles (the company shipped 11.2 million Xboxes in 2009 compared with 8.7 million in 2008).

Microsoft's spin machine has been trying to re-focus analysts's attention on its successful cost-cutting measures.

Microsoft spins it

"In light of the environment, it was an excellent achievement to deliver over $750m of operational savings compared with the prior year quarter," said Chris Liddell, Microsoft's finance chief.

Yet whichever way it spins it the company cannot hide the fact that falling sales of PCs has hit it where it hurts.

Google recently announced a rise in its second quarter profits and has recently announced its plans to move into the operating system business next year with Google Chrome OS.

Via Microsoft Reports Fourth-Quarter Results

Adam Hartley