Austerity bites into Microsoft

The world's biggest software company, Microsoft, has experienced its first drop in revenue since it went public in 1986 as the global recession wounds its seemingly indestructible sales of computer operating systems.┬á Microsoft tonight revealed revenue of $13.65 billion for the three months to March, a 6 percent decline on the same period last year. Hit by write-downs of $420 million in investments and severance charges of $290 million, profit has dropped by 32 percent to $2.98 billion. ┬á Microsoft makes most of its profit selling the Windows operating system and business software such as Microsoft Office. Demand has been hit by falling sales of personal computers and as business customers trim spending on these technology packages.┬á Microsoft's revenue from online services slipped 14 percent to $721 million in a blow to the company's internet offering which has struggled in the face of competitors such as Google, and earnings from entertainment devices such as Xbox 360 were largely dull.┬á The company's server and tools business fared better though, with a 7 percent increase in revenue to $3.46 billion.┬á The firmÔÇÖs chief financial officer, Chris Liddell described conditions as "the most difficult economic environment the company has faced in our 30-year history".┬á On a conference call with Wall Street analysts, he said: "We remain more cautious than most about the state of the world economy.ÔÇØ┬á "There's stuff to be happy with - they're controlling costs and getting that under control," said Kim Caughey, a senior analyst with Fort Pitt Capital. ┬á "The bad thing is demand and consumer preference seems to have affected their top line."