Microsoft sales dip shocks investors

SEATTLE: Microsoft���s and Amazon.com slumped in early US trading after reporting sales that missed estimates, signaling that technology companies aren���t all rebounding from the deepest US recession in half a century. Microsoft, the world���s largest software maker, said sales fell 17% last quarter to $13.1 billion, more than $1 billion short of the average estimate in a Bloomberg survey of analysts.

After Intel and International Business Machines topped estimates this month, some shareholders had expected Microsoft to do the same, said Michael Holland, who oversees more than $4 billion at Holland & Co in New York.

Instead, revenue fell in all five of Microsoft���s business units, contributing to the first annual sales drop in its 23-year history as a public company. ���They were ugly numbers and particularly unfortunate given IBM���s relatively positive backdrop,��� Holland said. The recession continues to hit sporadically and nastily.���

Microsoft���s shares had risen 11% since July 14, when Intel reported a smaller sales decline than analysts predicted. IBM topped estimates for second-quarter earnings last week and posted a smaller sales decline in its software unit than Microsoft. Apple also beat estimates, boosted by demand for the iPhone and Macintosh computer.

���We need to lift our game to another level,��� Chris Liddell, CFO of Redmond, Washington-based Microsoft, said.

Amazon.com, the largest Internet retailer, reported a 10% decline in second-quarter profit and posted less revenue than analysts had estimated.

Discounts and free shipping failed to drive enough growth to satisfy investors. Net income fell to $142 million from $158 million a year earlier. Sales rose 14% to $4.65 billion. Amazon.com���s results contrast with those of EBay. That company reported second-quarter earnings this week that topped analysts��� estimates.

Earnings reports are giving mixed signals about a recovery, said technology investor Michael Cuggino, who helps oversee $3.8 billion at Pacific Heights Asset Management. ���For every ho-hum number, you are seeing one where conditions are improving,��� he said. ���It���s consistent with the economy bouncing around the bottom.���