Microsoft Profits Down First Time in 23 Years

According to a press release, Microsoft’s net income fell 32 percent to $2.98 billion, or 33 cents per share, in its third quarter ended March 31. Quarterly revenue stood at $13.56 billion, a 6 percent drop compared to revenues in Q3FY08.

Microsoft has said weakness in the global PC market negatively impacted its results. Experts are also putting a lot of the blame on the growing netbook market. With the economy the way it is, a significant amount of people are turning to budget laptops or netbooks for their basic computing needs. While Microsoft recently boasted that 96 percent of new netbooks run Windows, it’s not exactly the money maker it could be for the company.

A recent report suggested that Microsoft makes in or around $15 on every Windows XP netbook sold. While this still amounts to a tidy profit when you consider XP is an operating system the company is “putting to bed,” it’s no where near what the company would make if everyone went out and bought laptops that came bundled with Vista.

The launch of Windows 7 should give the company a jump start in that respect, however, we wouldn’t bank on potential netbook owners being thrilled at the idea of Windows 7 Starter. Microsoft says this version is optimized for netbooks but with the ability to run just three applications at a time, we don’t think people will appreciate Microsoft restricting the number of things they can do at once.

  • FlayerSlayer
    Office 2007 isn't loved like 2003 was, Vista isn't loved like XP, Windows 7 is making more people wait to upgrade, and even in server environments, 2003 R2 is still the reliable standard over 2008. They're failing right now, which combined with the global recession and the trend towards smaller ultra-portables, it's not a fun year for Microsoft. But they need to get shaken up, reduce complacency, and get back in the game.

    2010 will likely be much better for them.
  • wikiwikiwhat
    Its called development spending. Win 7, MS's new Campus Mall. Giving money to Africa (possibly pirates, wouldn't that be hilarious).

    Doesn't matter to me anyways, I don't buy MS products. Do I use them? Well yeah, but Linux is the best thing since sliced cheese so I don't use it for a OS personally.

    I do play a Xbox 360. Yeah, it has a failure rate but stupid Sony has failed to impress with the PS3 and the Wii. Man, its exactly like owning a gamecube (it collects dust). When will Nintendo realize what they had with the N64 as far as 3rd Party support.
  • stryk55
    This is a true indication of the rough times the global economy is in. Its interesting because Microsoft, more than almost all software and tech companies, are more globalized and as such have a more diverse customer base. When the earnings drop, it shows you that the world economy is spending whole lot less.

    If Microsoft is hurting, the world is hurting.
  • rooket
    XP from Dell is generally overpriced to $89. Someone's making fat cash off of that.
  • falchard
    Pretty sure that $1.5 Billion less net income compared to last year can be attributed to the numerous lawsuits Microsoft had this year, like the multiple from the European Union, and that $300 million one from the guy who patented product keys.
  • tenor77
    It's that damn Zune!

    Or maybe with the impending release of Win 7 nobody wants to buy Vista........
  • norbs
    wonder if there is any correlation between this and the apple profits increase...
  • yoda8232
    Good, look at the quality of Vista and the 360.
  • ThePatriot
    About time.
    The only proper product MS makes is Server 2008.
    And there are plenty alternatives to that one.
  • goonting
    Server area is getting more Linux nowadays... then some offices in developing countries now use Openoffice