Even though December quarter revenue rose by 2 percent year-on-year to $US16.63 billion, the company saw a reduction in profitability.
Operating income was down 8 percent to $US5.94 billion, and net income down 11 percent to $US4.17 billion.
Microsoft ascribed part of the problem to "PC market weakness" and the netbook trend, but noted growth in the both the server and tools and entertainment and devices segments.
Microsoft's response to reduced profits is to eliminate 5000 jobs, and to "manage" other costs - including marketing.
Ironically, there are reports that the first wave of retrenchments hit the entertainment and devices and server and tools units particularly hard.
The company's last reported headcount was 94,286 (September 2008), so the planned reduction is 'only' a little over 5 percent. But that will be small consolation to those who get their marching orders.
And to put it in perspective, the number of people on the Microsoft payroll grew by just over 3000 in the three months from June 30 to September 30, 2008.
What did CEO Steve Ballmer have to say? See page 2.