Microsoft Pri0

Welcome to Microsoft Pri0: That's Microspeak for top priority, and that's the news and observations you'll find here from Seattle Times reporter Sharon Chan.

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April 24, 2008 2:11 PM

Microsoft Q3: Client weak

Posted by Benjamin J. Romano

Microsoft's core operating system business saw year-over-year revenue and operating income declines in the latest quarter. Likewise, the Online Services Business -- where it competes most directly with Google, the impetus for the Yahoo acquisition -- also saw a slight decline.

Brent Thill, wrote in a first-look note to clients, "[Client] will be the biggest source of controversy on the [earnings conference] call, as the Client division missed our revenue estimate by $350M despite strong PC shipments in CQ1."

Client operating income was $3.1 billion last quarter, compared with $4.2 billion in the year-ago period. Adjusting for about $1.2 billion of extra income recognized last year as part of the company's technology guarantee program, the year-over-year decline works out to be about 2.2 percent.

Colleen Healy, Microsoft's general manager of investor relations, pointed out that the business was facing a tough year-over-year comparison because in the same period last year, Windows sales were benefiting from the attention garnered by the launch of Windows Vista.

Windows Vista license sales passed 140 million in the quarter, up from 100 million in January.

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