Microsoft results disappoint

By Daisuke Wakabayashi

SEATTLE (Reuters) - Weak quarterly sales of Windows software and a below-target profit forecast for the current quarter overshadowed a strong outlook for the year ahead from Microsoft Corp (MSFT.O), driving its shares down 5 percent on Thursday.

The world's largest software maker also pressed its attack on takeover target Yahoo Inc (YHOO.O) as Chief Financial Officer Chris Liddell told analysts time was of the essence for a deal and he saw no evidence that a $44 billion offer undervalued the faded Web star.

Microsoft, which is considering the launch of a hostile takeover campaign, has set a Saturday deadline for Yahoo to reach a deal.

Liddell also shrugged off fears that the weak U.S. economy would hamper Microsoft's business, saying he had seen no significant spillover from the weak U.S. economy.

"We're being cautious just like everybody else," Liddell told Reuters. He also said the fact that quarterly Windows revenue missed company expectations was due partly to inventory build-up of computers and was a "quarter-specific" issue.

Net profit was $4.39 billion, or 47 cents per diluted share, for its third quarter ended March 31, compared with $4.93 billion, or 50 cents per diluted share, in the year-ago period. Revenue rose 0.4 percent to $14.45 billion.

Analysts, on average, were expecting 45 cents per share on revenue of $14.49 billion, according to Reuters Estimates.

"Revenues came in a little bit light. The main culprit there was the (Windows) client business. The division that did really well was the entertainment business," said Tom Telford, portfolio manager at American Century Investments, which owns Microsoft shares.