Microsoft FQ1 Net Income Rises 6% Despite Weak PC Sales

October 21 00:00 2011

New York, October 21 ( – Notwithstanding soft PC sales, Microsoft (NASDAQ: MSFT) posted 6 percent growth in net income in its first fiscal quarter. Its net income went up to $5.74 billion, or 68 cents a share, from $5.41 billion, or 62 cents a share, a year ago. Revenue rose 7 percent, to $17.37 billion, from $16.2 billion a year ago. Microsoft stock fell 1 percent after the financial results were released at the close of normal trading. Analysts had estimated that the company would earn 68 cents a share on revenue of $17.24 billion.

The PC market, especially those that use Microsoft’s Windows operating system, has seen a slump lately because economic uncertainty has curbed spending on information technology. Moreover, some of Microsoft’s business has been affected by newer devices like tablets and mobile phones. In order to deal with this threat, Microsoft is expected to release a version of Windows that has been redesigned for tablet devices.

Brendan Barnicle, an analyst at Pacific Crest Securities, said “We’ve now had a year where Windows hasn’t come in in-line with analyst expectations; it’s less of a miss than in the past.” He confirmed that the company’s revenue from Windows sales was weaker than he had expected.

One of Microsoft’s problems is that developing markets like China are now controlling some of the stronger sources of growth in the PC business and Microsoft finds it difficult to deal with widespread software piracy and lower prices in those regions.