Microsoft profit falls 11 percent

SEATTLE – Microsoft Corp. said Thursday its fiscal third-quarter profit fell 11 percent from a year earlier, when the software maker reported more than $1 billion in deferred revenue tied to delays in the launch of the Windows Vista operating system.

Microsoft said its net profit for the three months ended March 31 fell to $4.39 billion, or 47 cents per share, from $4.93 billion, or 50 cents per share, in the same period last year.

The results still beat Wall Street’s expectations. Analysts surveyed by Thomson Financial forecast a profit of 44 cents per share.

But investors, chewing over the company’s guidance and a drop in sales in the division that produces the flagship Office productivity programs, sent shares down $1.43, or 4.5 percent, to $30.37 in after-hours trading.

Earlier in the day, the stock had gained 35 cents, or 1.1 percent, to close at $31.80.

Revenue edged up to $14.45 billion from $14.4 billion in the year-ago quarter. Analysts were looking for $14.4 billion in sales.

“Despite a difficult economic environment, it was a very good performance,” Chief Financial Officer Chris Liddell said in an interview.

Stronger-than-expected PC shipments in the quarter could not offset the $1.67 billion in deferred Vista revenue booked in the 2007 quarter. Sales in the division responsible for Windows fell 24 percent to $4.02 billion.

Revenue from the division responsible for the Xbox 360 video game system ballooned 68 percent to $1.58 billion, which Microsoft attributed to robust demand for game consoles.

Microsoft’s online services business, which makes money primarily by selling advertising online, saw sales rise 40 percent to $843 million, but the division widened its operating loss in the quarter.

Microsoft trails far behind market leader Google Inc. in online ad sales and has made an unsolicited offer to buy Yahoo as a way to close the gap. Yahoo has said the offer is too low, but Microsoft has offered no signs that it will raise the price.

Microsoft upped its fiscal fourth-quarter guidance to a profit of 45 cents to 48 cents per share, at or below Wall Street’s current view for 48 cents per share. The software maker forecast $15.5 billion to $15.8 billion in sales. Analysts are expecting revenue of $15.56 billion.