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Microsoft profit tops forecasts but revenue weak
by Staff Writers
New York (AFP) Oct 18, 2012

US computing giant Microsoft on Thursday blamed a slowdown in personal computer sales for a fall in earnings and revenues for its fiscal first quarter.

Microsoft reported after the markets closed that net profit fell 21 percent from the year-ago quarter to $4.5 billion.

The tech giant rebounded from posting its first-ever loss, of $492 million in the prior quarter.

The earnings in the quarter ended September 30 amounted to 65 cents a share, better than Wall Street forecasts of 56 cents. But revenues were below expectations, falling eight percent to $16 billion.

The earnings come with Microsoft preparing a series of major product launches designed to reinvigorate what was once the world's biggest tech firm.

Microsoft next week launches its Windows 8 operating system designed for the PC market it dominates.

But it also will be launching its own tablet computer called Surface, taking on Apple and others. And it is rebooting its mobile platform with Windows Phone 8, aimed at gaining traction in the smartphone market.

"The launch of Windows 8 is the beginning of a new era at Microsoft," said Steve Ballmer, Microsoft's chief executive.

"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."

Windows remains the dominant platform for personal computers, but it has lost ground to Google and Apple in newer devices which use rival operating systems.

The company's search and online services have struggled, but its Xbox gaming system is the hottest in the industry.

Earlier this year, Microsoft took a $6.2 billion write-down to reflect the lower value of its assets.

But that did not affect the company's cash position.

Microsoft said revenue fell 8 percent in the first quarter to $16 billion, as sales fell ahead of the release of its new Windows 8 operating system.

Its Windows unit saw a 33 percent revenue slump, reflecting lower sales in anticipation of the new operating system.

Revenues for its Xbox entertainment and devices division fell one percent, but the Xbox "continues to be the top-selling console in the US, where it now has 49 percent market share," the company said.

"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, Microsoft's chief financial officer.

The company reaffirmed its fiscal 2013 operating expense forecast of $30.3 to $30.9 billion but offered no other financial guidance.

"MSFT's Q1 was better than much of earnings we've seen, but was still uninspiring," said Adam Holt at Morgan Stanley.

"We would like to see better performance in the non-PC related areas as a hedge on weaker PCs."

Microsoft shares were down 1.3 percent at $29.11 in after-market trading, after closing 0.3 percent lower at $29.50.


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Japan's Hokkaido welcomes Chinese, despite row
Tokyo (AFP) Oct 18, 2012
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