Microsoft fell harder than analysts were expecting during the June quarter, with profit plummeting 29% and revenue down 17%.

The company's shares (NAS: MSFT) tumbled up to 8% in after-hours trading.

The silver lining? CFO Chris Liddell told The Wall Street Journal this morning: “We're still in tough economic conditions and we don't see that getting better in the near term”.

He added: "Having said that there is some sense we have hit bottom.”

Mr Liddell told the Journal the economy would remain weak for the rest of 2009 but that “there is
some reason for optimism for the next calendar year."

Market researcher Gartner shared Mr Liddell’s view that the release of Windows 7 on October 23 should spark year-on-year PC market growth during the fourth calendar quarter after multiple quarters of decline.

For now, however, the numbers are dismal.

During the three months to June 30, sales of the company’s flagship Windows software fell by a third. Recession woes were compounded by people holding off PC purchases until the new version of Windows arrives. $US276 million revenue  was deferred to cover a promotion that sees people who buy a new PC with Windows Vista between now and Windows 7's October 23 release receive a free upgrade to the new OS.

Sales at the business division, which includes Office, fell 13%.

And online sales fell 14%, despite Bing.com gaining a couple of percentage points in search audience share against Google.

Brighter spots were the server division, where sales rose nearly 6%, and the entertainment division - home of the Xbox 360 - where business increased 25%.

Microsoft, Yahoo boards to meet Friday
Microsoft confirmed that its board was meeting with Yahoo’s Friday morning New Zealand time. It’s widely expected that the two companies will announce a search partnership, with Microsoft driving a single online advertising platform that runs across both companies’ sites, and the pair dividing up revenue.

The logic is that together, Microsoft and Yahoo will have the scale to chase down Google, which currently enjoys an audience that’s roughly six times larger than Bing.com, and about four times larger than Yahoo’s search engine.

EMC
Elsewhere among US techs, results were also bad - a contrast to the recent run of turnaround results and bullish forecasts from the likes of Apple, Google, Intel and IBM.

EMC reported a 43% fall in profit today today, but said it saw the market stabilising in the second half of the year, and IT budgets “firming up”.

The company's shares (NYSE: EMC) 1.67% after hours after rising 4.09% in regular trading to close to a 52-week high.

Xerox
Xerox saw a 35% profit fall during its June quarter. Revenue fell 18%, but cash flow increased 38%, and the company, which recently axed 2400 staff (leaving it with 54,700) said it expected to shave $US1 billion from its $US6.7 debt mountain over the rest of the year.

Investors liked the cash-flow story and Xerox shares (NYSE: XRX) rose 10.35% following its announcement during regular trading.

Amazon
Amazon’s revenue climbed 14% to $US4.65 billion for the June quarter, but net income was down 10% - largely due to the impact of a $US51 million legal settlement with Toysrus.com during the quarter. Media sales (including books) grew just 1%, but electronics and general merchandising sales surged 35%.

After its June quarter closed, Amazon announced it would buy Seattle-based footwear etailer Zappos.com for $US847 billion in cash and stock. The deal, announced on July 23, is the largest in Amazon's 14-year history.

Amazon's shares (NAS: AMZN) fell 6.73% after hours, albeit after a big run-up. The Kindle maker's stock was up more than 5% in regular trading, and has more than tripled since last November.