“It could have been a lot worse” – that’s the consensus on the latest quarterly results from Microsoft, Amazon and Samsung.
For the first time since going public in 1986, Microsoft saw a fall in sales compared to the year-ago period, by six percent, to $13.65 billion. Profit fell by a rather heftier 32 percent to $2.98 billion. Earnings per share were down 30 percent at 33 cents – pretty much in line with expectations. Operating income actually rose by three percent to $4.4 billion, largely thanks to some pretty big cuts in expenses, and Microsoft says the spending cuts are set to continue.
The financial results for the third quarter ended March 31, 2009, included $290 million of severance charges from its plans to cut up to 5,000 positions, along with $420 million of impairments to investments. Combined, these two charges reduced earnings per share by $0.06.
The falls were driven largely by an overall drop in tech spending. This has hit particularly hard in one of the company’s traditional strongholds, its client division, where weak Windows sales led to a 16 per cent fall in sales to $3.4 billion.
Services revenues also declined. Sales were down 14 percent on the same period the previous year to $721 million, as advertising revenue fell. However, there are prospects for improvement, with a new version of Search set to launch in the next few months and rumors of a tie-up with Yahoo.
Server-software sales grew seven percent year over year to $3.47 billion, a little slower than in previous quarters. Sales in the business division fell five percent to $4.5 billion. Gaming prioved more fruitful, with unit sales of the Xbox up 30 percent to 1.7 million, although price cuts meant revenue fell two percent.
The company still has plenty in the pot, with $25.34 billion in cash and short-term investments. But it didn’t buy back any of its stock in the quarter, citing the poor economic environment.
The company has declared itself happy with the figures. “While market conditions remained weak during the quarter, I was pleased with the organization’s ability to offset revenue pressures with the swift implementation of cost-savings initiatives,” said Chris Liddell, chief financial officer at Microsoft. “We expect the weakness to continue through at least the next quarter.”
Meanwhile, internet retailer Amazon.com beat expectations with a 24 percent rise in first-quarter profits and a very respectable increase in sales.
For the first quarter ended March 31, Amazon made a profit of $177 million, or 41 cents a share, up from $143 million a year ago. Sales increased 18 percent to $4.89 billion. If it weren’t for a $268 million hit from exchange rates, says the company, net sales would have grown by a quarter compared to the same period last year.
The company is clear about the reason for its success. “We’re grateful and excited that Kindle sales have exceeded our most optimistic expecations,” said Jeff Bezos, Amazon’s founder and CEO.
The news isn’t quite so good for Samsung, which has also reported first-quarter results. Net income fell 72 percent to 620 billion won ($460 million), hit by operating losses in its component businesses. At least this is a profit, though, marking an improvement over the small loss it reported in the fourth quarter. The company says it expects the second quarter to be slightly better, although its memory-chip business is likely to carry on having problems.
Revenue in the latest quarter was 18.6 trillion won, up 8.8 percent on a year ago.