Microsoft profit falls 29 percent, weak sales affects all of its units

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With the slump of the PC demand and the increasing attention on netbooks, small laptops that are meant to be used on the web and have non-resource-intensive applications; Microsoft has posted a 29 percent drop in its earnings report in profits during last quarter.

It posted $13.10 billion for the fourth quarter of this financial year, ending on June 30, 2009, from a 17 percent decline; while profits fell to $3.05 billion, and its operating income fell 30 percent to $3.99 billion, when compared from the same period as of last year.

“While economic conditions presented challenges this year, we maintained our focus on delivering customer satisfaction and providing solutions to our customers to save money,” its chief operating officer, Kevin Turner, said in a statement.

“I am very excited by the wave of product and services innovations being delivered in this next fiscal year.”

For the units, its Server and Tools unit saw a drop of 6 percent; while both its Online and Office units saw a fall of 13 percent. Its Entertainment and Devices unit, home of the Xbox 360 and Zune, has reported a 25 percent fall, while Windows was the major money-losing unit with a fall of 29 percent.

Falls for the Entertainment and Devices unit was partially because of the decreased sales of the consoles, and the price cuts it made to the console to compete better with the Nintendo Wii and the PlayStation 3. Its non-gaming businesses, however, made a bigger impact of a loss of 42 percent, because of less sales in Mediaroom and Zune.

In the Windows unit, however, sales fell because of the slump of PC demand, with estimates of a decline of 5 to 7 percent; its Windows 7 Upgrade Option program, and less OEM licenses being sold.

Shares in the company fell 7 percent to close $23.73, in after hours trading.

But with the recent success of Bing, plus the awaited release of its next operating system, Windows 7, plus an updated version of Windows Sever and its Office suite, it is said that Microsoft should reverse the trend because of the optimism of what is coming in the next earnings report. Plus, with talks of Microsoft and Yahoo coming into a search agreement, that could send Microsoft shares skyrocketing.