Microsoft Income Gains 6%, but Weak PC Sales Continue

Microsoft said its net income rose 6 percent, to $5.74 billion, or 68 cents a share, from $5.41 billion, or 62 cents a share, a year ago. Revenue jumped 7 percent, to $17.37 billion, from $16.2 billion a year ago.

Analysts on average estimated Microsoft would earn 68 cents a share on revenue of $17.24 billion, according to Thomson Reuters.

The PC market, or at least for the vast majority of PCs inside companies running Microsoft’s Windows operating system, have suffered lately as economic uncertainty has crimped spending on information technology. Newer types of devices like tablets and mobile phones have sapped some of the business as well. Microsoft said its revenue from selling Windows rose less than 2 percent during its first quarter, which ended Sept. 30.

Microsoft’s shares fell 1 percent after it released the financial results at the close of normal trading hours.

Shipments of new PCs grew only 3.6 percent globally in the quarter, which ended Sept. 30, according to the research firm IDC. Apple defied the trend, reporting a 26 percent increase in the number of Macs sold during the same period, the company said on Tuesday.

Brendan Barnicle, an analyst at Pacific Crest Securities, said the company’s revenue from Windows sales were weaker than he had expected. “We’ve now had a year where Windows hasn’t come in in-line with analyst expectations,” he said. “It’s less of a miss than in the past.”

One other problem for Microsoft is that some of the stronger sources of growth in the PC business are now in developing markets like China. While that is good news for other players in the PC business, like Intel, that make hardware components, Microsoft has a harder time in those regions because of high software piracy rates and lower average selling prices for its products.

Microsoft’s Windows business is also facing a growing challenger in the iPad. Tech industry executives are divided about the degree to which Apple’s tablet computer is eating away at sales of traditional PCs, but even Microsoft executives concede there has been an impact, especially on low-end notebooks.

Earlier this week, Apple’s chief executive, Tim Cook, said he believed that the iPad was cannibalizing some sales of Macs, but that a “materially larger” number of iPad buyers were choosing the tablet device over a Windows PC. Apple sold 11.1 million iPads in its last quarter. “With cannibalization like this, I hope it continues,” Mr. Cook said.

Microsoft intends to tackle the threat from the iPad with a new version of Windows, known currently as Windows 8, that has been redesigned for the touch screens of tablet devices, but that product is not expected to appear for about another year.

Peter Klein, Microsoft’s chief financial officer, said in a news release that the company’s “product portfolio is performing well, and we’ve got an impressive pipeline of products and services that positions us well for future growth.”

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