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New York: Microsoft Corp, whose Windows software dominates the personal-computer market, fell 4.6 per cent in early US trading after sales slumped, casting doubt on whether PC demand can hold up in a slowing economy.
The world's largest software maker reported a 24 per cent drop in sales of Windows last quarter and forecast earnings that may miss analysts' estimates, breaking a streak of positive reports from Intel and Google.
More PC sales are coming from developing economies, where software prices are lower and piracy is more common, dragging down Windows revenue.
"Emerging markets have very high piracy rates," said American Technology Research analyst Donovan Gow. He recommends buying Microsoft shares. "They are not paying for the copies of Windows on those PCs."
Microsoft dropped $1.45 to $30.35 in trading before US exchanges opened. The shares closed at $31.80 on the Nasdaq Stock Market Thursday.
Microsoft also said it was standing firm on an offer to buy Yahoo for $44.6 billion. Chief financial officer Chris Liddell said the company doesn't plan to raise the bid for Yahoo, which rejected the offer. If no deal is reached by the weekend, Microsoft may explore other options, such as trying to oust Yahoo's board or walk away from the offer, he said.
Drop
Third-quarter net income fell 11 per cent to $4.39 billion. Revenue was little changed at $14.5 billion.
Analysts expected Windows sales to exceed predictions as research firm IDC said PC shipments rose 15 per cent in the quarter. Microsoft had forecast growth of as much as 11 per cent.
The shortfall occurred in a region where Microsoft has been cutting prices and trying to discourage piracy. Piracy rates rose anyway, particularly in China, Liddell said.
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