Microsoft profit dips ahead of Office revamp

Written by Reuters | Seattle | Updated: Jan 26 2013, 08:29am hrs
Microsoft Corps quarterly profit edged lower as Office software sales slowed ahead of a new launch, offsetting a solid but unspectacular start for its Windows 8 operating system and sending the companys shares down 1.4%.

The results mark a stark change from the 1990s, when Microsoft was the unchallenged king of computing and the release of a new Windows operating system would supercharge sales, generate excitement and generally boost its stock.

None of that appears to be true now, as Microsoft has been overtaken by Apple Inc and Google Inc in the rush toward mobile computing, while sales of traditional desktop computers are in decline. Theres still no sign that Windows 8 is a gangbuster, said Andrew Bartels, an analyst at Forrester Research. Compared to prior periods, where you saw a big increase when a new one came out, youre not seeing that.

Profit at the worlds largest software company slid to $6.4 billion in the fiscal second quarter, from $6.6 billion in the year-ago quarter. Overall sales rose 3% to $21.5 billion, Microsoft said on Thursday, in line with analysts' estimates.

The biggest factor weighing on Microsoft was a 10% decline in sales at its Office unit to $5.7 billion, which took into account the loss of deferred revenue relating to discounted upgrades to the new version of the software, expected shortly. Its a pause before a product launch, which is typical, said Josh Olson, an analyst at Edward Jones.

Windows sales jumped 24% to $5.9 billion, slightly ahead of analysts average expectations, which had been lowered over the last few months.