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On the eve of the Windows 8 launch and in the face of a challenging PC market, Microsoft Thursday reported essentially flat sales and reduced profitability for its fiscal first quarter.
But with the imminent Windows 8 release and other new products such as Office 2013 and Windows Phone 8 on the horizon, Microsoft sought to portray the company's prospects as bright.
"The launch of Windows 8 is the beginning of a new era at Microsoft," said CEO Steve Ballmer in a statement. "Investments we've made over a number of years are now coming together to create a future of exceptional devices and services, with tremendous opportunity for our customers, developers, and partners."
Microsoft is scheduled to begin shipping Windows 8 on Oct. 26. The same day the company will also begin selling Surface, the vendor's branded tablet computer that runs Windows 8.
For the first fiscal 2013 quarter ended Sept. 30, Microsoft reported revenue of $16.0 billion, down 7.9 percent from $17.4 billion in the same quarter last year. Net income was $4.5 billion, down more than 22 percent from $5.7 billion one year earlier.
The results included the deferral of $1.36 billion of revenue due to Microsoft's Windows upgrade offer, Office upgrade offer and pre-sales of Windows 8 to OEMs. When that deferred revenue is factored back into the financial results, sales in the quarter were flat year-over-year.
Slowing economic conditions in Europe and OEM partners drawing down their inventories of Windows 7-based PCs had an impact on the financial results, said Microsoft CFO Peter Klein said in a conference call with investors.
"The PC market was challenged this quarter," Klein said. "We saw the overall PC market decline in advance of the launch of Windows 8," added Bill Koefoed, general manager of investor relations.