Microsoft warns of tough times

The news caps a difficult year for Microsoft

Software giant Microsoft has warned that its second quarter profits and revenues will be lower than Wall Street expects.

Revenue for the second quarter is now expected to be between $6.4bn and $6.5bn, about 5% lower than forecast, while the company's full-year revenue is predicted to weigh in at about $25.2bn to $25.4bn, also 5% lower than expectations.

It is the latest technology company to warn that its profits are being hurt by poor economic conditions globally.

Our long-term outlook on the information technology market and the PC industry remains positive

John Connors, chief financial officer, Microsoft

The news caps an already difficult year for Microsoft, following the court decision that the company should be split in two.

"We believe, like many other technology companies, that the current weakness in worldwide economic conditions is resulting in a slowdown in PC sales, corporate IT spending and consumer online services and advertising," John Connors, chief financial officer at Microsoft said.

He added:"However while our short-term results will continue to be affected by the current economic conditions, our long-term outlook on the information technology market and the PC industry remains positive."

The statement was released after the close of trade.

In after hours trading, Microsoft shares changed hands at about $53, having earlier closed the normal-hours session down $1.75 at $55.5.

The company will report its actual results on 18 January.

Hard times

Intel, Motorola, Apple, Gateway and Nortel Networks have all warned of tough times ahead, issuing profit warnings that have rocked global markets.

There are some exceptions to the rule.

Just prior to the Microsoft announcement however, software company Oracle announced that its profits were slightly higher than expectations.

Net income was $623m, 62% higher than the same quarter last year, powered by the demand for applications software.

"Our applications business is just getting stronger and stronger," Larry Ellison, the company's chief executive said.