Microsoft quarter view disappoints, bullish on '09

By Daisuke Wakabayashi

SEATTLE (Reuters) - Microsoft Corp reported weak quarterly Windows sales and gave a current-quarter earnings forecast at the low end of Wall Street expectations, sending its shares down nearly 5 percent on Thursday.

That overshadowed a strong fiscal 2009 forecast which came in ahead of Wall Street projections, even if the world's largest software maker is slightly wary about the economic outlook.

"We're being cautious just like everybody else," Chief Financial Officer Chris Liddell told Reuters, referring to the economy. He said Windows revenue was lower than the company's expectations due in part to inventory build-up of computers, which was a "quarter-specific" issue.

The results were set against the backdrop of Microsoft's battle to buy Internet company Yahoo Inc, but Liddell declined to comment before a conference call with analysts.

Microsoft posted a net profit of $4.39 billion, or 47 cents per diluted share, for its third quarter ended March 31, compared with $4.93 billion, or 50 cents per diluted share, in the year-ago period. Revenue rose 0.4 percent to $14.45 billion.

Analysts, on average, were expecting 45 cents per share on revenue of $14.49 billion, according to Reuters Estimates.

"Revenues came in a little bit light. The main culprit there was the (Windows) client business. The division that did really well was the entertainment business," said Tom Telford, portfolio manager at American Century Investments, which owns Microsoft shares.

The third-quarter profit a year ago got a one-time bump from revenue deferred by delays in releasing upgrades to the company's Windows and Office software.