Microsoft posts first revenue decline

24 April 2009

REDMOND, Washington: Microsoft, the IT giant, posted a decline in revenues for the first time in its history in Q1, with total sales down 6% to $13.65 billion (€10.3bn; £9.3bn) on an annual basis, including a downturn in its online services unit.

Google, the market leader in internet advertising, has remained profitable, but also registered its first ever quarterly loss at the start of 2009, while Yahoo's profits fell by 72% in Q1 on an annual basis.

Similarly, Microsoft reported a 32% contraction in income to $2.98bn year-on-year from January to March, down from $4.39bn in the year-ago period.

Its online unit saw a 14% slide in revenues to $721m, compared with $843m in the opening months of 2008.

Richard Williams, senior software analyst at Cross Research argued its "online business looked bad, but I still believe they have to be in that space to fulfil the larger vision of where Microsoft is going."

However, he added that this may mean the company has to "acquire rather than build," a strategy Microsoft seemed to adopt last year when it launched an unsuccessful takeover bid for Yahoo.

Sales of Windows, its PC operating system, shrank by 16% to $3.4bn, and the company estimated that deliveries of personal computers fell by at least 7% in the first quarter, thus contributing one of the major factors behind this trend.

Data sourced from Wall Street Journal/New York Times; additional content by WARC staff