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Global financial crisis to hit Microsoft's revenues

But software giant posts quarterly increase

Multiyear annuity sales lifted Microsoft's revenue 9 percent for the first quarter of fiscal 2009, but the company lowered guidance for its second quarter as crisis grips the global economy, news that came as no surprise to financial analysts.

Microsoft reported revenue of $15.06bn for the first quarter, which ended on September 30, with earnings per share of $0.48. Both numbers beat consensus estimates from Thomson Reuters analysts, who expected the company to earn $14.78bn for the quarter on EPS of $0.47.

Operating income for the quarter was $6bn, while net income was $4.37bn, Microsoft reported.

While the quarter overall was strong, Microsoft lowered its revenue and EPS expectations for the second quarter, as financial analysts expected they would before results were announced Thursday.

New guidance for the second quarter, which ends on December 31, is in the range of $17.3bn to $17.8bn for revenue and $0.51 to $0.53 for diluted EPS. Previously, the company said it expected about $18bn in revenue with EPS of $0.55 for the second quarter.

Prior to Microsoft's statement about its financials, analysts expressed concern that IT spending in the US would slow due to the crisis and that PC unit growth, a core driver of Microsoft's Windows client business, would not meet current market assumptions of 10.3 percent growth for the year.

For the first quarter, however, the client business was a key reason for Microsoft's positive results, the company said. Recurring revenue from a combination of the client segment as well as the Microsoft Business and Server and Tools divisions grew 20 percent during the quarter and contributed heavily to overall revenue growth, Microsoft said.


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