Microsoft quarterly profits fall slightly

Microsoft badges
Image caption A fall in global computer sales has hurt sales of Microsoft's Windows operating system

Microsoft's profits in the three months to the end of December fell slightly as lower computer sales hit its core Windows business.

The world's largest software firm made a net profit of $6.624bn (£4.27bn), against $6.634bn for its second quarter last year.

Revenues rose 5% to $20.89bn, slightly down on some analysts' expectations.

Revenue at the Windows operating system division fell, but rose at its server, Xbox 360 and online services arms.

Wall Street welcomed the figures, with Microsoft's shares rising 2.1% in after-hours trading.

Colin Gillis, an analyst with BGC, said: "People were afraid it was going to be much, much worse."

Tighter cost control and a continuing reduction of losses at the Bing search engine helped boost the figures, he said.

Analysts were expecting a fall in business at the Windows division due to slower sales of PCs.

The computer industry is facing a worldwide shortage of hard disk drives due to flood devastation in Thailand hitting suppliers.

But Windows is also facing competition from the growth of tablet computers such as Apple's iPad and mobile devices using Google's Android system.

However, Microsoft is hitting back with the release of Windows 8, an operating system for PCs and mobile devices.

Microsoft chief executive Steve Ballmer said in a statement: "We delivered solid financial results, even as we prepare for a launch year that will accelerate many of our key products and services."

During the quarter the Windows and Windows Live division posted revenue of $4.74bn, a 6% fall on the previous year.

The Entertainment & Devices division saw the sharpest revenue rise, up 15% to $4.24bn.

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