Microsoft Corp. said Thursday that its quarterly revenue fell from the previous year for the first time in its 23-year history as a public company.
The software giant said its profit dropped 32 percent to $2.98 billion, or 33 cents per share in its third fiscal quarter.
Revenue was down 5.6 percent to $13.65 billion from $14.45 billion last year. Analysts were expecting earnings of 39 cents a share on revenue of $14.1 billion, according to consensus forecasts from FactSet Research.
For the quarter ended March 31, the company reported net income of $3 billion, or 33 cents a share, down from $4.39 billion, or 47 cents a share, a year earlier.
Chief Financial Officer Chris Liddell said the company expected market conditions to remain weak through at least the next quarter.
Microsoft plans to cut 5,000 jobs by the middle of 2010, as it aims to save $1.5 billion annually in operating expenses. The company is also cutting travel spending, putting off part of a campus expansion and paying less for contract workers.
In the company's client division, which makes the Windows operating system, sales were down 16 percent while earnings decreased 19 percent.
PC shipments fell for the second straight quarter as consumers and businesses sharply cut back on technology spending during the current economic tough times.
In online services - a market dominated by its competitor Google - revenue was down 14 percent. At the entertainment and devices division, sales fell 1.6 percent.
The Redmond, Wash. - based company is still in talks over a potential search advertising partnership with Yahoo Inc. that could boost its presence on the Internet.