Thursday, July 23, 2009

Microsoft Profit Drops 29% Amid Weak Sales, Broadcom Net Income Sinks

. Thursday, July 23, 2009

By stockOzone team

Microsoft Corp. reported a 29% decline in quarterly profit Thursday, placing it alongside several technology firms whose earnings have slumped because of the recession.

"Our business continued to be negatively impacted by weakness in the global PC and server markets," Chris Liddell, Microsoft's chief financial officer, said in a statement.

Net income at the Redmond, Wash., software giant fell to $3.05 billion, or 34 cents a share, in its fiscal fourth quarter, down from $4.3 billion, or 46 cents, a year earlier. Revenue declined 17% to $13.10 billion.

Microsoft shares lost as much 8% in late trading after rising 76 cents, or 3.1%, to $25.56 in regular trading.

Earnings fell across all of its business segments, including a 33% decline in its Client division, which makes Windows operating system software.

"They were really light on revenue," said Kim Caughey, senior analyst at Fort Pitt Capital Group. "They need to explain where the money went. If I was Nancy Drew, this would be the case of the missing revenue."

Showing its intense interest in competing in Web-based markets, Microsoft made several major announcements in recent weeks, including the launch of its Bing search engine and the unveiling of an online-based suite of Office software to be launched next year.

Both of those products are salvos in the company's battle with Google Inc., which has been trying to encroach on Microsoft's lucrative business software market.

Settlement cuts Amazon earnings Inc. sales rose 15% but earnings fell 10% in the second quarter as the Seattle-based online retailer made a $51-million payment to settle a long-standing dispute with former partner Toys R Us. shares, which closed at $93.87, up $5.08, fell nearly 8% in extended trading after the results were released.

The company said it earned $142 million, or 32 cents a share, down from $158 million, or 37 cents, a year earlier.

Although revenue climbed nearly 15% to $4.65 billion, it was slightly below analyst estimates of $4.69 billion.

Sales of items such as books, CDs and DVDs inched up 1% to $2.44 billion, while electronics and other general merchandise sales soared 35% to $2.07 billion. said Wednesday that it would buy privately held online shoe store Inc. in a deal worth about $850 million.

Broadcom net income sinks
Broadcom Corp., the maker of semiconductors for wireless headsets and television set-top boxes, said its second-quarter profit dropped 90% on sluggish demand for chips.

Net income fell to $13.4 million, or 3 cents a share, from $134.8 million, or 25 cents, a year earlier, the Irvine company said. Broadcom had a one-time benefit of $65.3 million from a Qualcomm Inc. royalty settlement. Sales declined 13% to $1.04 billion.

Broadcom shares fell as much as 5.6% to $27.55 in extended trading after closing at $29.18, up 56 cents.

Qualcomm agreed in April to pay Broadcom $891 million over four years to end a global dispute over technology used in mobile phones.

Disclosure: Author does not own any of the stocks discussed here.

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