SEATTLE, APRIL 25, 2008 (STAR) (AP) - Microsoft Corp. said its fiscal third-quarter profit fell 11 percent from a year earlier, when the software maker reported more than $1 billion in deferred revenue tied to delays in the launch of the Windows Vista operating system.

Microsoft said its net profit for the three months ended March 31 fell to $4.39 billion, or 47 cents per share, from $4.93 billion, or 50 cents per share, in the same period last year.

The results still beat Wall Street's expectations. Analysts surveyed by Thomson Financial forecast a profit of 44 cents per share.

But investors, chewing over the company's guidance and a drop in sales in the division that produces the flagship Office productivity programs, sent shares down $1.43, or 4.5 percent, to $30.37 in after-hours trading.

Earlier in the day, the stock had gained 35 cents, or 1.1 percent, to close at $31.80.

Revenue edged up to $14.45 billion from $14.4 billion in the year-ago quarter. Analysts were looking for $14.4 billion in sales.

"Despite a difficult economic environment, it was a very good performance," said Chief Financial Officer Chris Liddell in an interview.

Stronger-than-expected PC shipments in the quarter could not offset the $1.67 billion in deferred Vista revenue booked in the 2007 quarter. Sales in the division responsible for Windows fell 24 percent to $4.02 billion.

Microsoft maintains tough line on Yahoo Posted by Ina Fried | 1 comment

With Steve Ballmer having issued sharp words on Yahoo across Europe this week, it was not a surprise to see Microsoft take a hard line on its Yahoo bid Thursday.

In its just-completed conference call with analysts, Microsoft Chief Financial Officer Chris Liddell said the company has seen no good reason to up its bid.

Liddell said Yahoo continues to lose search share and see profitability decline.

"We've yet to see tangible evidence that our bid substantially undervalues the company," Chris Liddell said. "In fact, we have seen the opposite."

Of course, Yahoo also talked tough on Tuesday in its call, suggesting that it won't consider a deal unless it fairly values the company, which it has said Microsoft's does not.

Liddell complained at the glacial pace at which Yahoo was responding to Microsoft's offer.

"We have been clear that speed is of the essence," he said. "Unfortunately, the transaction has been anything but speedy.

For those who have forgotten the details amid the seemingly endless war of words, Microsoft made its offer on Feb. 1, saying that it would pay a combination of cash and stock valuing Yahoo at $31 a share. Yahoo rejected the offer, saying it undervalued the company. Since then, Yahoo has been looking at all kinds of other options including a tie-up with AOL and a search advertising test with Google.

Liddell reiterated the company's deadline for Yahoo to get serious about negotiations.

On Thursday, Liddell again told Yahoo to hurry up.

"Unless we make progress with Yahoo by this weekend, we will reconsider our options." He adds that those options include taking an offer directly to Yahoo shareholders or walking away from Yahoo shareholders. If Microsoft walks away, Liddell suggested Microsoft might spend the money on other acquisitions or in trying to boost its own online business.

While Microsoft was talking up the strength of its bid, it's offer actually got weaker on Thursday given that it is a half cash, half stock offer. Microsoft's shares dropped in after-hours trading Thursday in the wake of Microsoft's less-than-blowout earnings. As of around 3:30 p.m. PT, the stock was at $30.27, down $1.53, or 4.8 percent.

Chief News Editor: Sol Jose Vanzi

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