Microsoft's net income fell 28% year on year for its 2007 second fiscal quarter, as it spent ahead of its mass market launch of Windows Vista this month.
Revenue was up 6% despite the fact that the company deferred $1.64 billion (£833m) of revenue and operating income from its second quarter to its third because of Windows Vista and Office 2007 coupons issued over the winter holidays.
For the second quarter ended 31 December 2006, Microsoft reported revenue of $12.54 billion on net income of $2.63 billion, or $0.26 earnings per share (EPS). Both revenue and EPS were ahead of estimates from Thomson Financial analysts, who predicted Microsoft would earn $12.1 billion, or $0.23 per share.
However, while revenue was up, net income and EPS were down for the same time period last year, when Microsoft reported revenue of $11.84 billion and net income of $3.65 billion. Analysts were expecting a drop in earnings for the vendor as it gears up for the biggest consumer release of its Windows operating system in five years next Tuesday.