Microsoft profit dips in spite of new Windows 8

Michael Bow
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COMPUTING giant Microsoft yesterday posted a quarterly drop in profits, as slow sales of its Office software dragged down a positive start for its freshly minted Windows 8 system.

Sales rose three per cent overall to $21.5bn (£13.6bn) for the three months ending December 2012, the company said last night, but profits slid to $6.4bn, down from $6.6bn in the year previously.

This equated to 76 cents a share this quarter versus 78 cents a quarter a year ago. Analysts had pinned hopes on profits of 75 cents a share.

The company’s flagship Microsoft Office software had a sluggish quarter, with revenues falling 10 per cent to $5.7bn. Windows sales leapt, however, by 24 per cent, hitting $5.9bn.

“Our big, bold ambition to re-imagine Windows as well as launch Surface and Windows Phone 8 has sparked growing enthusiasm with our customers and unprecedented opportunity and creativity with our partners and developers,” chief executive Steve Ballmer said.

The firm’s revenue growth was also diminished by a surge in the amount of money it spent on marketing and advertising this quarter.

The firm racked up a $4.3bn marketing and sales bill, up from $3.7bn in the quarter last year, reflecting a trend by the world’s largest computer firm to target more consumers and eat into territory traditionally dominated by arch rival Apple.

Microsoft said it has sold more than 60m Windows 8 licenses since launch, a solid start for its latest operating system.

Microsoft shares fell slightly in after-hours trading.