Microsoft thumped by slumping PC market

The recession has finally caught up with Microsoft. The company has suffered the first year-on-year sales decline in its 34-year history.

In its March quarter figures just announced, Microsoft reports a 32% decline in net income and a 6% decline in revenue against the year-ago period.

Slumping PC demand saw a 16% decline in sales of Microsoft's Windows operating system.

Online revenue decreased 14%.

Xbox and game sales fell 1.6%.

Server software was a relative bight spot, with sales increasing 7.6%.

Microsoft's expat Kiwi CFO, Chris Liddell (pictured), expects demand to remain weak over the next quarter, and will be implementing tighter cost controls.

"With our continued R&D investment and our broad suite of products and services, we remain in a great position to compete and gain share in the marketplace," said Microsoft chief operating officer Kevin Turner in a statement accompanying the results.

Mr Turner was in New Zealand last week to meet staff and brief customers on Microsoft’s hosted unified communications product, expected to be co-launched with Telecom services division Gen-i around September. The partenership will see companies use and access Office, Exchange and unified communications (combining a unified inbox, presence and follow-me numbers, among other features) via the web.

The immediate online news wasn't quite so good. The COO's visit coincided with Microsoft's local portal, MSN.co.nz, being hacked and defaced.

The quarterly figures include a $US230 million charge for up to 5000 redundancies in a previously announced round of job cuts.

Microsoft New Zealand has so far escaped the cull.

Although weak, the result matched analysts' expectations, and the market seemed to like Mr Liddell's swifty implemented cost controls. Microsoft shares (NAS: MSFT) are trading up 5% in after-hours trading following the announcement.