Microsoft warns of global recession

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Microsoft warns of global recession

Antony Savvas

Microsoft has reported record first quarter sales, including "healthy" sales of enterprise software, although it has warned of the effects of the developing global recession.

For the first quarter ended 30 September, Microsoft said sales reached £8.85bn, which was a 9% increase on the same quarter last year.

The operating profit and net profit was £3.52bn and £2.57bn respectively, with operating margins falling from about 42% to under 40%, partly as a result of increased research and development spending and admin costs.

Microsoft said it enjoyed particular strength in multi-year annuity sales, which grew more than 20% during the quarter from the combined businesses of Client, Microsoft Business Division and Server and Tools.

"Our customers are asking how they can save money and do more with less," said Kevin Turner, chief operating officer at Microsoft. "Microsoft is uniquely positioned to help our customers save money through supplier consolidation, increased productivity, and a low total cost of ownership through the depth and breadth of our product portfolio and solutions."

Microsoft continued to add to its product and services portfolio during the quarter with offerings such as Microsoft SQL Server 2008, Microsoft Hyper-V Server 2008 and the first service update to Microsoft Dynamics CRM Online.

"In a challenging economic environment, the first-quarter results exhibit the strength and diversity of our business model," said Chris Liddell, chief financial officer at Microsoft.

Microsoft said its business outlook "reflects a balance of risks and the likelihood of a continued economic slowdown".

It said, "The trends seen late in the first-quarter are now forecasted to continue, whereas previous expectations were for the economy to improve in the second half of the fiscal year.

"In this economic environment, the company is focused on three main actions working with customers to provide high value products at the lowest total overall cost of ownership, increasing focus on expense management, and targeting investment into the highest priority strategic opportunities."


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