4 of 8
Sales: $13.1 billion, down 17%
Profit: $3.1 billion, down 29%

Microsoft's CFO Chris Liddell summed it up by calling the software giant's fiscal fourth quarter "one of the most difficult, but in some ways encouraging, in the company's history."

Sales didn't even come close to Wall Street's expectations. Demand for PCs, servers and IT services continued to slump, driving down demand for Windows, software, and the company's enterprise services business. Despite new search engine Bing's success, Microsoft still couldn't turn a profit in its search ad division. What's more, the company said the economic and product-demand situations will likely get worse this quarter.

Yet Liddell said the company is in "the best shape that I've seen."

He may not be far off base. Microsoft is executing a rigid cost-cutting campaign by eliminating 5,000 positions and reducing other expenses. Windows 7, which has widely received positive reviews, is set to debut in late October. Bing is taking off, and a new Office suite is set to debut next year -- including a free Web version that will compete with Google Docs.

And, perhaps most importantly, as the economy starts to recover in the coming quarters, experts say businesses will begin to buy new computers, software and service contracts -- what's known as a refresh cycle to tech companies. If all the stars align, Microsoft's new products will be ready for that refresh.

NEXT: Yahoo
Last updated July 24 2009: 4:51 PM ET
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