Microsoft results offer hope to tech sector

Microsoft has so far weathered the economic downturn better than expected, with sales in the three months to the end of September topping Wall Street estimates, according to figures released on Thursday.

The figures reflect the relative strength shown recently by other diversified technology companies with global reach, such as IBM, which have been able to offset weakness in the US with growth in other markets.

However, the software maker at the same time cut its financial forecast for the rest of its current fiscal year, which ends next June, as it abandoned its earlier hopes for an economic upturn in the early part of 2009.

Chris Liddell, chief financial officer, said the results showed the “strength and diversity of [Microsoft’s] business model” in the face of the downturn, and added that the company expected to continue to gain market share in the IT business during the downturn.

For the latest quarter, the first of its fiscal year, Microsoft reported a 9 per cent increase in revenues to $15.1bn, ahead of the $14.8bn expected by analysts, with earnings per share of 48 cents, in line with estimates.

For the fiscal year as a whole, Microsoft cut its revenue forecast to $64.9bn-66.4bn, a decline of around $2bn at the mid-point of the range, with its earnings per share forecast cut to $2-2.10 from an earlier range of $2.12-2.18.

The latest figures reflected a jump in some of Microsoft’s operating costs, with research and development spending climbing 24 per cent to $2.28bn and general and administrative costs up 24 per cent to $887m. As a result, the company’s operating profit margin dropped to 39.8 per cent, from 42.5 per cent the year before.