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Three months after announcing that an 11 percent quarterly drop in income would lead to 5,000 layoffs, the world’s largest maker of software this week posted a third-quarter revenue decline of 6 percent year-over-year, to $13.65 billion.

 

Officials at Microsoft (News - Alert) Corp. also posted net income of $2.98 billion for the three-month period ended March 31 – a 32 percent year-over year decline – and earnings per share of 33 cents, a 30 percent drop.

 

Chris Liddell, the Redmond, Washington-based company’s chief financial officer, said that while market conditions remained weak during the quarter, he was pleased with the organization’s ability to offset revenue pressures with the swift implementation of cost-savings initiatives.

 

“We expect the weakness to continue through at least the next quarter,” he said.

 

Liddell’s remark about cost-saving initiatives apparently reached investors’ ears.

 

The Wall Street Journal’s John Letzing reports that shares of Microsoft rose today as analysts noted the company’s steadfastness and flexibility as PC demand wanes in this down economy. Specifically, shares traded up 8.6 percent to $20.54, their highest level in more than three months.

 

Letzing cites a note from J.P. Morgan analyst John DiFucci, saying that Microsoft “reported soft revenues but did follow through on reducing expenses more than it had indicated it would, which seems to have relieved investors.”

 

Certainly, the company’s plan to cut 5,000 positions brought costs that affected the quarter’s bottom line. Microsoft says it saw about $290 million in severance charges related to the cuts. Together with $420 million of impairments to investments brought on by the layoffs, the two charges reduced earnings per share by 6 cents, company officials say.

 

Though revenue from enterprise customers remained stable during the quarter, revenues from Microsoft’s “Client, Microsoft Business Division,” and “Server & Tools” was negatively impacted by weakness in the global PC and server markets.

 

Said Kevin Turner, chief operating officer at Microsoft: “With our continued R&D investment and our broad suite of products and services, we remain in a great position to compete and gain share in the marketplace.”

 

The PC market has been in trouble for awhile – due largely to the increasing popularity of Netbooks – low cost, mini-laptops optimized for Internet use. They usually sell for about $300 to $400, and they’ve emerged as one a bright spot in the struggling electronics industry.

 

The PC space took a major hit earlier this year when, as TMCnet reported, the world’s fourth-largest PC maker announced that it’s laying off about 11 percent of its workforce, or 2,500 employees.

 

Officials at Lenovo, a Chinese company with U.S. headquarters in Morrisville, North Carolina, said they’re also reducing executive pay by 30 to 50 percent, including merit pay, long-term incentives and performance bonuses.