Microsoft 2009 outlook rosy, but investors trip on near-term

SEATTLE — Microsoft Corp. is looking ahead to a strong fiscal 2009, with or without Yahoo.

The software maker gave Wall Street a first peek at guidance for next year indicating that strong worldwide sales would overpower hiccups in the U.S. economy that could depress information technology spending.

But investors disappointed with Microsoft's more immediate outlook for the current fourth quarter and with weaker-than-expected sales in the division responsible for Windows sent shares 4.6 percent, or $1.47, to $30.33 at the open of trade Friday.

Before diving into quarterly results Thursday, Microsoft Chief Financial Officer Chris Liddell spent a few minutes on a conference call with analysts reiterating the company's stance on its stalled bid to buy Yahoo Inc. In February, Yahoo's board rebuffed Microsoft's offer — worth $44.6 billion at the time — saying it undervalued the company. Since then, the value of the offer has fluctuated with Microsoft's share price; it was worth $44.06 billion Thursday.

"Unless we make progress with Yahoo towards an agreement by this weekend, we will reconsider our alternatives," he said. "These alternatives clearly include taking an offer to Yahoo shareholders or to withdraw our proposal and focus on other opportunities."

Microsoft CEO Steve Ballmer made similar comments in a speech in Italy on Wednesday, when he said his company is "prepared to move forward alone without Yahoo."

Liddell said Microsoft will issue an update on the Yahoo situation next week.

In the quarter ended March 31, Microsoft's profit fell 11 percent to 4.39 billion, or 47 cents per share, from $4.93 billion, or 50 cents per share, in the same period last year, when the software maker reported more than $1 billion in deferred revenue tied to delays in the launch of the Windows Vista operating system.

Revenue edged up to $14.45 billion from $14.4 billion in the year-ago quarter.

The results came in ahead of Wall Street's expectations on both measures. Analysts surveyed by Thomson Financial forecast a profit of 44 cents per share on $14.4 billion in sales.

Sales of Windows software were not as strong as Microsoft or analysts had predicted in the quarter, despite Microsoft's comments that sales of Vista licenses — now at 140 million, up from 100 million in January — are on track.