Microsoft Windows sales dip, shares fall (Reuters)

SEATTLE (Reuters) ? Microsoft Corp smashed Wall Street's earnings estimates once more, helped by strong sales of its Office software and Xbox game console, but its shares fell on concerns about soft PC sales reducing demand for its flagship Windows product.

The world's largest software maker follows Google Inc, Apple Inc and IBM in reporting surprisingly good results as technology spending holds up relatively well in an uncertain economy.

But Microsoft was hit by waning growth in PC sales, partly due to the collapse of netbook sales in favor of tablets. On Wednesday, chipmaker Intel Corp warned that PC sales will not be as strong as it had expected this year.

Sales of Windows, which comes pre-installed in most PCs, fell for the second consecutive quarter.

"It kind of jumped out at me that the Windows and Windows Live division didn't particularly grow this quarter even though we know from Intel yesterday that the number of PCs shipped in the quarter grew 1 percent," said Kim Caughey Forrest, senior analyst at fund manager Fort Pitt Capital.

Microsoft on Thursday posted net profit of $5.87 billion, or 69 cents per share, up from $4.52 billion, or 51 cents per share, in the year-ago quarter.

That easily beat Wall Street's average estimate of 58 cents, according to Thomson Reuters I/B/E/S. Microsoft has beaten the average profit estimate for each of the last nine quarters.

Sales rose 8 percent to $17.37 billion, ahead of analysts' average estimate of $17.23 billion, boosted chiefly by sales of Office, Xbox and server software behind Microsoft's push into Internet-centric, or "cloud" computing.

Microsoft shares fell 0.7 percent in after-hours trading, after closing at $27.09 on Nasdaq. The stock is up 8 percent over the past 12 months, compared to a 30 percent rise in the Nasdaq composite index.

(Reporting by Bill Rigby; Editing by Richard Chang)

Source: http://us.rd.yahoo.com/dailynews/rss/tech/*http%3A//news.yahoo.com/s/nm/20110721/bs_nm/us_microsoft

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