Third quarter profits fall at Microsoft

Profits fell 11% to $4.39 billion (£2.22 billion) at Microsoft in the 3 months to the end of March compared with $4.93 billion a year earlier, while sales were steady at $14.5 billion.

Despite the fall, the software company still exceeded analysts forecasts.

However, its 40% increase in sales to $843 million still trails behind Google.

Microsoft’s Xbox 360 video game consoles displayed a good, helping sales in its entertainment and devices sector grow 68% year-on-year.

The results were announced shortly before a deadline Microsoft has given Yahoo to respond to its $44.6 billion bid.

Chris Liddell, Microsoft‘s chief finance officer, said with respect to Yahoo we have been clear speed is of the essence. With or without a Yahoo combination, Microsoft is focused on the online advertising market, said Mr Liddell.

However, Yahoo is keen not to be bought by Microsoft and has even teamed up with Google in a 2-week trial which will see search-driven Google adverts alongside the search results of Yahoo’s website.

Yahoo’s board of directors maintains that Microsoft’s offer undervalues the firm.

Andy Miedler, an analyst with Edward Jones said, that while the Microsoft Yahoo deal made strategic sense, from a financial perspective, we’re cautious.

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