Microsoft Fails To Inspire

Investors worried about an economic slowdown got no help from Microsoft after the close on Thursday.

Microsoft announced that revenues for its fiscal third quarter came in below analysts’ expectations, but investors were soothed by in-line guidance looking forward.

Microsoft’s earnings of 23 cents a share after charges met estimates, but revenues of $9.62 billion came in well below $9.83 billion estimates.

But Microsoft’s fiscal fourth quarter and 2006 revenue guidance was in line to above expectations, boosting the stock about a half percent after hours. Microsoft said it sees fourth-quarter revenues of $10.1-$10.2 billion, and 2006 sales of $43.3-$44.1 billion.

“Despite a mixed enterprise software environment, the quarter played out largely as we expected and operating income and earnings per share results were in line with our expectations,” Scott Di Valerio, corporate vice president and corporate controller at Microsoft, said in a statement. “Given our optimism about the future with our strong product pipeline and the growth opportunities from our investments in innovative products and services, we expect increased revenue growth in fiscal 2006.”

Microsoft’s results will likely do little for a market that got battered Thursday by a lower than expected first-quarter GDP reading that also showed inflation pressures.

The Nasdaq fell 26 to 1904, the S&P 500 lost 13 to 1143, and the Dow tumbled 128 to 10,070. Volume rose to 2.17 billion shares on the NYSE, and 1.92 billion on the Nasdaq. Decliners led 22-10 on the NYSE, and 22-7 on the Nasdaq. Downside volume was 82% on the NYSE, and 80% on the Nasdaq. New highs-new lows were 32-144 on the NYSE, and 29-217 on the Nasdaq.

Also after the close, KLA-Tencor warned, Microstrategy missed revenue estimates, and Netgear and WebMD beat estimates.

During the day, Openwave , Internet Security and Intersil rose on their earnings reports.

LSI , Siebel , JDS Uniphase , Cadence , Kronos , Cabot Micro , MRV and Sanmina fell on their results.

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