Microsoft suffers profit drop as world waits for Win 8

Microsoft reported a drop in profits blaming sluggish sales of PCs using its operating system as users chose instead to wait for the launch of Windows 8 later this month

Microsoft is waiting for Windows 8 but in the meantime it has charted a fairly disappointing quarter as it suffered along with the rest of the PC industry over a sluggish summer.

Figures from IDC this morning revealed that the PC market has been down across Europe as users wait for the next OS launch from Microsoft and that behaviour has hit the software giant with profits down by 22%.

The three months ended 30 September saw revenues dip by 8% to $16.01bn and profits fell by $4.47bn from $5.74bn in the same period a year ago with the dip in demand for PCs running Windows dropping.

“The launch of Windows 8 is the beginning of a new era at Microsoft,” said Steve Ballmer, CEO at Microsoft. “Investments we’ve made over a number of years are now coming together to create a future of exceptional devices and services, with tremendous opportunity for our customers, developers, and partners.”

The Server & Tools business reported $4.55 billion in first-quarter revenue, an 8% increase from the prior year period, driven by double-digit revenue growth in SQL Server and more than 20% growth in System Center revenue. In September, Microsoft continued to enrich its server offerings with the launch of Windows Server 2012.

The Microsoft Business Division posted $5.50bn, a 2% decrease from the prior year, the  Windows & Windows Live division posted revenue of $3.24 billion, a 33% drop on a year earlier and the online services division bought in $697m a 9% increase.

"While enterprise revenue continued to grow and we managed our expenses, the slowdown in PC demand ahead of the Windows 8 launch resulted in a decline in operating income,” said Peter Klein, CFO at Microsoft. “Multi-year licensing revenue grew double-digits across Windows, Server & Tools, and Microsoft Business Division products as businesses commit to our technology roadmap.”

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