Microsoft shares closed down 11.37 per cent Friday and shed $US6.31 a day after the company announced that its second-quarter earnings and revenue would not meet initial expectations.
Shares closed at $49.18 on trading volume of more than 160 million shares. At one point last week, the price fell to $47.75 a share.
Microsoft last week said its revenue would miss initial guidance by 6 per cent. Revenue for the quarter ending December 31 is now expected to come in between $US6.4 billion and $6.5 billion.
Profit per share will hit 46 cents per share. Analysts polled at First Call/Thomson Financial predicted the software maker would make 49 cents per share for the quarter.
Microsoft also reduced its outlook for the full fiscal year. Revenue will total about $25.2 billion or about 5 per cent lower than previous expectations. It expects to earn between $1.80 and $1.82 per share in diluted earnings for the entire fiscal year - well below First Call's forecast of $1.91 per share.
Microsoft attributed its new guidance to a slowdown in personal computer sales, a slight reduction in corporate sales of information technology and weaker demand for MSN, the company's online Internet service.
In a JP Morgan Securities research report recently, analysts said the weakness in PC sales is more widespread than originally expected, affecting not only the company's consumer business but Microsoft's desktop applications business. This hurts sales of Microsoft Office, which accounts for approximately 30 per cent of the company's revenues, the report states.