Microsoft Earnings Fall

Microsoft announced the financial results for the quarter that ended December 31.  They reported that their operating income declined 8%, net income fell 11%, and diluted earnings per share dropped 6%.  These declines were reportedly higher then Microsoft’s own estimates.

Sluggish PC sales where blamed for the poorer than expected showing.

At first glance, lower PC sales makes Microsoft seem like another victim of the bad economy.  However, remember that Microsoft Vista is the operating system powering the vast majority of new PC systems.

Had there not been public and technical concerns over Vista’s viability, there certainly would have been more PC sales, hence more operating system sold, ergo more revenue for Microsoft.  This casts a new light on the connection between PC sales and Microsoft’s fiscal vitality.

I delayed upgrading my PC over concerns about Vista, and I understand others — who buy considerably more PCs — did so as well.

Microsoft’s poor showing is not so much a result of a lacking economy, but of an under-performing operating system.

What do you think? Please leave a comment!