Online Services Sluggish In Microsoft Q4

Microsoft raked in a record $60.4 billion in revenue in its fiscal year ended June 30, but its fourth quarter earnings came in just short of what Wall Street analysts were expecting, due in part to weakness in its online services business.

Microsoft's fiscal fourth quarter profit rose 42 percent to $4.3 billion and 46 cents a share, while Wall Street analysts had expected earnings of 47 cents per share. During the same quarter last year, Microsoft reported earnings of $3.0 billion and 31 cents per share.

During the quarter, Microsoft saw strong revenue growth in Windows Server and SQL Server, and also reported solid results in licensing for Office 2007 and Windows Vista, which passed the 180 million mark during the quarter.

However, Microsoft's Online Services Business continued to underperform, reporting a $488 million loss in operating income, compared to $210 million during the same quarter last year. For the year, the Online Services Division racked up an operating income loss of $1.2 billion, compared to $617 million the previous year.

For its 2009 fiscal first quarter, which ends September 30, Microsoft expects revenue of $14.7 billion to $14.9 billion and earnings of between 47 and 48 cents a share. Wall Street analysts expected revenue of $15.1 billion and earnings of 49 cents per share.

For its full fiscal year, which ends June 30, 2009, Microsoft forecast revenue of $67.3 billion to $68.1 billion and earnings of $2.12 to $2.18 per share. Analysts expected revenue of between $66.9 and $68 billion and earnings of between $2.13 and 2.19 per share.

Microsoft shares were down $1.64 at $25.88 in after-hours trading Thursday.