Microsoft Corp. Chief Financial Officer Chris Liddell predicts a slow recovery for the world’s largest software maker, the technology industry and the economy.

“We are not planning and sitting here and expecting there is a going to be a bounce,” Liddell said in an interview. “The reality is that this is very broad-based. I think people are now only coming to grips with what that means.”
Microsoft announced plans to fire as many as 5,000 workers, the first job cuts in the Redmond, Washington-based company’s 34-year history. Because of the length and unpredictability of the slowdown, Liddell suspended financial forecasts for at least the rest of the fiscal year, which ends in June.
Net income declined 11 percent to $4.17 billion, or 47 cents a share, missing a company forecast for profit of as much as 53 cents. Sales rose 1.6 percent to $16.6 billion
Microsoft fell $2.27, or 12 percent, to $17.11 in Nasdaq Stock Market trading, the biggest drop since November 2000.
Personal-computer shipments rose at the slowest pace in six years last quarter, researcher Gartner Inc. said this month. The PC market will be the same, or weaker, for the rest of Microsoft’s fiscal year, Liddell said.
“Our model is not for a quick rebound,” Chief Executive Officer Steve Ballmer said in an unusual appearance on Microsoft’s earnings conference call with analysts. “Our model is things go down and they reset. The economy shrinks and then it doesn’t rebound, it builds from a lower base.” The outlook signals increasing pressure on the top PC sellers, Hewlett-Packard Co. and Dell Inc., said Maynard Um, an analyst at UBS AG in New York. The two companies, which report earnings next month, may fall short of analysts’ estimates, he said in a note.
Microsoft’s view also puts a damper on the best-case scenario envisioned by investors like Michael Holland, chairman and founder of New York-based Holland & Co., which oversees $4 billion including Microsoft shares.
“People managing businesses are preparing for a longer slog,” Holland said. “This is not your grandma’s recession.”
The recession is different from the last U.S. slowdown, which hit the U.S. from March to November 2001, Liddell said. This time, the slump is global and is hurting every sector, while the previous one largely focused on technology.
Microsoft avoided job cuts in the previous slowdown, and sales held up better than those of rivals such as Oracle Corp. and Apple Inc. This time, Apple’s sales are growing faster, and Oracle’s profit and forecast met analysts’ estimates last quarter.
“It’s pretty telling that Microsoft withdrew guidance when they have two monopoly businesses under their wing,” said Tony Ursillo, an analyst at Boston-based Loomis Sayles & Co. “Apple is a nearly entirely transactional business, exposed almost completely to the consumer market and they still offered an outlook.”
(Source: Bloomberg)