Microsoft Sales Decline for First Time Ever

Microsoft's been caught on the same downward recession spiral.

It's been a tough year for the economy, and Microsoft wasn't immune to the effects of the recession.

Microsoft yesterday reported its first ever annual sales drop in company history. For the fiscal year ended June 30, 2009 Microsoft reported revenue of $58.44 billion, a 3 percent decline from the prior year. Operating income, net income and diluted earnings per share for the year were $20.36 billion, $14.57 billion and $1.62, which represented declines of 9 percent, 18 percent and 13 percent respectively.

"Our business continued to be negatively impacted by weakness in the global PC and server markets," said Chris Liddell, chief financial officer at Microsoft.

In response to the changing economic climate, Microsoft has turned to layoffs for thousands of employees, which has helped the company soften the blows to the bottom line.

"In light of that environment, it was an excellent achievement to deliver over $750 million of operational savings compared to the prior year quarter," Liddell added.

The first-ever decline in sales in Microsoft history isn't surprising given that the just past third quarter saw the first-ever decline in profits.

“While economic conditions presented challenges this year, we maintained our focus on delivering customer satisfaction and providing solutions to our customers to save money,” said Kevin Turner, chief operating officer at Microsoft. “I am very excited by the wave of product and services innovations being delivered in this next fiscal year.”

The release of Windows 7 could start a wave of sales for Microsoft as both consumers and businesses figure it's time to upgrade, especially after skipping Windows Vista.

Microsoft, however, isn't so quick to pronounce Windows 7 as the savior of the industry just yet. Microsoft senior vice president Bill Veghte said last month that the new OS might not be able to turn things around single-handedly.