Microsoft has reported a 17 per cent drop in its quarterly profit compared to the same quarter in the previous year.

Net profit for Microsoft's fiscal second quarter, which ended on December 31, was $1.55 billion, down from $1.87 billion in the year-ago period.

According to Microsoft, the decrease was a result of an after-tax charge of $2.17 billion, of which $1.48 billion related to the completion of the Employee Stock Option Transfer Program.

A Reuters report suggests that the fall in unearned revenue reflected a slower take-up of the longer-term software deals.

Revenue for the quarter reached $10.15 billion – a 19 per cent increase over $8.54 billion in the previous year. This is the result of a more positive outlook in the technology market, according to Microsoft.

Microsoft chief financial officer John Connors said: "In the second quarter, the overall corporate IT market also began to show signs of a recovery, with increased demand for both desktop and server products."

Microsoft raised its revenue outlook based on this stronger personal computer demand. The company expects revenue for the quarter ending March 31 to be in the range of $8.6 billion and $8.7 billion.