Microsoft has announced a 6% year-on-year decline in its revenue.

Microsoft Corporation yesterday (23 April) announced a 6% year-on-year decline in its revenue for the third quarter ended 31 March 2009. 

This is the company’s first quarterly drop since its public listing 23 years ago in 1986.

The worldwide leader in computer software, services, and solutions reported total revenue of $13.65 billion (£9.3bn). Operating income, net income and diluted earnings per share for the quarter were $4.44bn, $2.98bn and $0.33 per share, which represented an increase of 3% and declines of 32% and 30%, respectively, when compared with the prior year period.

Microsoft makes the majority of its profit through the Windows operating system and business software such as the Office suite of tools.

However, demand has been hit by falling sales of personal computers as consumers and businesses cut back during increasingly tough times.

The results also included $290 million of severance charges related to the previously announced plan to reduce up to 5,000 positions and $420m of impairments to investments. Combined, these two charges reduced earnings per share by $0.06.

Revenue in Client, Microsoft Business Division, and Server & Tools was negatively impacted by weakness in the global PC and Server markets, yet revenue from enterprise customers remained stable during the quarter.

Microsoft Chief Financial Officer, Chris Liddell, said: “While market conditions remained weak during the quarter, I was pleased with the organisation’s ability to offset revenue pressures with the swift implementation of cost-savings initiatives.”

However, in an online webcast, Liddell offered a bleak forecast for the future: “While we’d all like to think the economic recovery will be soon and painless, we unfortunately think it will be slow and painful.”

During the quarter, Microsoft released the beta version of the Windows 7 operating system, which remains on track for a fiscal year 2010 launch. Development milestones were achieved on other products including Microsoft Office 2010, Windows Server 2008 R2 and Windows Mobile.

“With our continued R&D investment and our broad suite of products and services, we remain in a great position to compete and gain share in the marketplace,” said Kevin Turner, Chief Operating Officer at Microsoft.

Whilst Microsoft’s shares have slumped by 40% over the last 12 months, they were up by 4% in after-hours trading yesterday – possibly reassured by the confirmation of the Windows 7 launch.