updated 05:15 pm EDT, Thu July 23, 2009
Microsoft Q2 2009 Results
Microsoft this afternoon reported a steep drop in its financial health for the spring triggered by its most important businesses. The Windows developer experienced its first-ever sequential drop in revenue and saw its revenue fall 17 percent year-over-year to $13.1 billion. The company's net income also declined by a sharp 29 percent compared to spring 2008, landing at $3.05 billion.
The company wasn't specific on all causes but primarily blamed the world economic collapse for hurting the "global PC and server markets." It explained that PC sales are estimated to have dropped between 5 and 7 percent in the quarter, reducing the number of new Windows licenses. About $276 million in revenue for Windows 7 upgrades also won't be reported until the OS is officially released in October, Microsoft added.
It expects its fortunes to turn around in the near future, including through the release of Windows 7; others in the pipeline mostly address deficiencies in the mobile space with both Windows Mobile 6.5 and the Zune HD unofficially poised to ship in September. Its business expenses also shrunk by $750 million due to previously announced job cuts for 5,000 workers.
The news nonetheless underscores mounting problems for Microsoft's market share. Although the PC market shrank on a year-to-year basis, Apple's Mac shipments grew 4 percent in the same timeframe even with continued higher average system prices that would theoretically render it more sensitive to tougher economic conditions. Microsoft's decline also implies an apparent ineffectiveness for its Laptop Hunters ad campaign in persuading customers to opt for more frugal Windows notebooks.
As part of an effort to restore the Windows brand following damage caused by the initial launch of Vista, Microsoft is also planning to launch retail stores near Apple's locations in the fall.