* Q2 EPS $0.76/shr vs Wall Street view $0.75/shr
* Revenue up 3 pct, in line with analyst view
* Sales at Office, Xbox unit dip, Windows up
* Shares drift lower after hours
(Adds analyst quote, earnings details, byline)
By Bill Rigby
SEATTLE, Jan 24 Microsoft Corp's
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
company's shares down 2 percent.
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 generate excitement and
generally boost its stock.
Neither appears to be true now, as Microsoft has so far lost
out to Apple Inc and Google Inc in the battle
for the mobile computing generation (see graphic link.reuters.com/jad55t).
Profit at the world's largest software company slid to $6.4
billion, or 76 cents per share, in the fiscal second quarter,
from $6.6 billion, or 78 cents per share, in the year-ago
Wall Street had expected 75 cents per share, on average,
according to Thomson Reuters I/B/E/S.
Overall sales rose 3 percent to $21.5 billion, Microsoft
said on Thursday, in line with analysts' estimates.
"It's a pause before a product launch, which is typical,"
said Josh Olson, an analyst at Edward Jones.
With the loss of some deferred revenue to account for
discounted upgrades to new software, Office revenue fell about
10 percent to $5.7 billion, which is not unusual ahead of a new
launch, expected in the next few weeks.
Windows sales, which included some deferred revenue from the
launch of Windows 8 last October, jumped 24 percent to $5.9
billion, slightly ahead of analysts' average expectations, which
were lowered over the last few months.
Microsoft said it has sold more than 60 million Windows 8
licenses since its late-October launch, an unexceptional start
for a product which has not gripped the public's imagination in
the way of Apple's iPad. Microsoft did not detail sales of its
competing Surface tablet.
"Windows 8 continues to have an uphill battle in convincing
investors this is going to be the key to the growth story for
Microsoft," said Daniel Ives, an analyst at FBR Capital Markets.
"It continues to be a major prove-me product cycle."
Microsoft shares have fallen 2 percent since Windows 8 was
launched on Oct. 26, compared to a 5 percent gain in the
tech-heavy Nasdaq composite index.
Microsoft shares fell to $27.06 in after-hours trading,
after closing at $27.63 on Nasdaq.
(Additional reporting by Jennifer Saba; Editing by Richard