Microsoft sees Windows sales slump as PC demand slows

Microsoft saw revenues from sales of its Windows operating system decline by six per cent in the past three months, as slowing demand for PCs from both consumer and business markets impacted sales.

The firm reported that revenues for its Windows and Windows Live division for the second quarter of its financial year hit $4.74bn, down from $5.05bn in the same quarter in 2010 and a decrease of $120m from first quarter sales.

Speaking on an earnings call about the results, Bill Koefoed, general manager for investor relations at Microsoft, said the slowdown in sales of Windows was due to a number factors and were affecting the industry at large.

"It was a challenging quarter for the industry. Factors such as flooding in Thailand, macroeconomic uncertainty and competing form factors resulted in an overall market that we estimate declined two to four 4 per cent," he said.

"In the PC market, the impact of the hard drive supply-chain constraints were not limited to a specific region or OEM-type."

Chief financial officer, Peter Klein, added that the firm expected these tough conditions to continue into the first six months of 2012.

"We expect revenue to continue to be impacted by market dynamics similar to the past several quarters. PC growth in emerging markets will outpace developed markets and business PC growth will outpace consumer PC growth," he said.

"We also expect the hard disk drive shortage to continue to challenge the PC market through at least the next quarter."

Microsoft had warned analysts earlier this year that it expected to see profits in the division slip due to these issues.

Despite the decline in Windows sales, the firm still saw overall profits for the second quarter rise from $6.2bn to $6.3bn and announced it now has a cash holding of $112bn, up from $108bn in June 2011.

The results come on the same day Google posted record quarterly revenues of more than $10bn and revealed it now has over 90 million users of its Google+ service.