Early fiscal Q4 numbers for Microsoft disappoint, net income down 29%

Thursday, July 23, 2009 21:20

Analysts had been settling on 13% as the average earnings hit that a company in the IT sector should take in this down economy, which some believe may be finally on the mend. But the early report from Microsoft, minutes in advance of its quarterly conference call Thursday, was not good by comparison: Net income was down 29% year-over-year to .05 billion, on revenue that was down 17% from the year-ago quarter to .1 billion.

It could be Microsoft’s first genuinely bad quarter since the year terrorism struck the US, and it has managed to drive its full-year net income down 18% over fiscal 2008.

Three years ago, Microsoft deferred some revenue from a relatively good quarter, on account of early coupon sales of Windows Vista. That deferral helped the company boast record earnings during a later quarter in 2007. This year it deferred some revenue again, but just 6 million. That might help come fiscal Q2 2010, but not much.

Flash Player 9 or higher is required to view the chart
Click here to download Flash Player now

View the full MSFT chart at Wikinvest

A check of today’s 8-K report delivered to the US Securities and Exchange Commission reveals one very troubling number Microsoft execs will have to answer for today: Earnings from the Client division (meaning, Windows Vista and XP) dropped 33% on the quarter and 17% on the year, to just .17 billion, on 29% lower revenue year-over-year.

For reasons that may be chocked up to rumors that the company would confirm further job cuts of up to 5,000 — a downsizing move analysts tend to applaud — the bad news triggered a bit of a rally in Microsoft stock this afternoon, up a half of one percent over yesterday’s close on the NASDAQ.

Further details after Microsoft’s quarterly conference call later this afternoon.