Microsoft Profits Drop But Things Looking Up

A day after the long-awaited Windows 7 hit the market, Microsoft is back in the news–this time for the less sexy quarterly earnings report. Microsoft’s fiscal report for the period from July to September shows a drastic decrease in sales from the same period last year. While the $3.57 billion in earnings doesn’t sound too bad to you or I, it represents a 17 percent year-over-year drop. On the plus side, the earnings are markedly above what analysts were calling for.

Further boosting the news for Microsoft is that it had deferred revenue on earnings from presales of Windows 7, so the numbers that it reported are below its actual performance. Deferred revenue from the sales amounts to $1.57 billion. Xbox also experienced strong sales in the quarter thanks to cut pricing. While the 2.1 million Xbox units sold is slightly down from last year, it is .9 million units from the previous quarter.

With Windows 7 just hitting stores yesterday and Microsoft stores opening for business, the future is looking up for MS, though the down economy is still expected to impact sales.  In an effort to address this, Microsoft continues to cut operating costs. [via NY Times and CNET]