Microsoft profits warning sparks Nasdaq slide

NEWS The company announced late yesterday that it will miss analysts' expectation by five or six per cent for its second fiscal quarter. Revenues for the year are expected to hit only $25bn, a nine per cent rise on last year's $22.96bn. Today's trading saw the Nasdaq index continue its slide, falling by about four per cent. The news, which was not unexpected, follows a series of announcements from all PC makers - with the exception of Dell - warning of slowing growth in sales. However, some had previously thought the hype surrounding the reversal in fortunes of many industry stalwarts was overstated. John Higgins, director general of the CSSA, pointed out that the profit warnings of the past few months were only about slowing growth - not falling sales. Profits and turnover are now only increasing by single digits instead of the double-digit increase people have become used to in the last three years. Higgins said: "It's no surprise. There's a new reality that we all have to get used to. The heady days are over and we'll have to adjust to more modest growth - it's still a growth that most other industries would be pleased with." Matt Hanrahan, analyst at Bloor Research, said: "Microsoft shares tumble on Nasdaq - it makes a good headline and that's it - there's hardly a company in the country that isn't using Microsoft, it's just a drop in expectations. "And, of course, people have been lining up to kick Microsoft for years. But really, the markets aren't healthy."