First drop in revenue for Microsoft

SOFTWARE giant Microsoft yesterday posted its first drop in revenue since it went public in 1986, after it was hit by the global downturn and falling sales of its key products.<br /><br />The world&rsquo;s biggest software firm said revenue for the three months to the end of March was $13.65bn (&pound;8.3bn), a drop of six per cent on last year, as sales of Office and Windows dropped sharply.<br /><br />Chris Liddell, the firm&rsquo;s chief financial officer, gave a downbeat outlook for the rest of the year, casting a cloud over what was an otherwise stellar day for global markets.<br /><br />&ldquo;While we&rsquo;d all like to think the economic recovery will be soon and painless, we unfortunately think it will be slow and painful,&rdquo; he said.<br /><br />Net profit at the firm was down 32 per cent to $2.98bn, thanks to writedowns on the value of its investments and a $290m charge relating to the first redundancies in the company&rsquo;s history.<br /><br />Sales at the firm&rsquo;s client division, which sells Windows and Office, fell by 15 per cent to $3.4bn, with a particularly severe drop in emerging markets, where cheap laptops that run Linux and the low-margin Windows XP are becoming increasingly popular.<br /><br />The firm is also still struggling to give arch rival Google a run for its money in the online advertising space, with revenues at its online division falling 14 per cent to $721m, while sales of its games console, the X-Box, were flat.<br /><br />Meanwhile, also posted a drop in quarterly profits, sending its shares off six per cent in after hours trading. But revenue was up 15 per cent on last year, just shy of market expectations.