Microsoft profit falls on sluggish Windows demand, tax charge

SEATTLE (Reuters) - Microsoft Corp said on Monday fiscal second-quarter profit fell, in line with Wall Street's forecasts, as sluggish personal computer sales dampened demand for Windows software and the company struggled with unfavorable currency moves against the strong U.S. dollar.

Shares of the world's largest software company, which have surged to 14 year highs in the past few months, fell 2 percent in after hours trading to $46.05.

"While currency is a headwind for Microsoft and other large international companies, we would characterize the headline numbers as good enough, although some bulls may have been hoping for a bigger beat," said Daniel Ives, an analyst at FBR Capital Markets.

Microsoft reported profit of $5.86 billion, or 71 cents per share for the latest quarter, compared with $6.56 billion, or 78 cents per share, in the year-ago quarter.

Sales rose 8 percent to $26.5 billion, largely due to the acquisition of Nokia's phone handset business last year.

Analysts had expected revenue of $26.3 billion and earnings of 71 cents per share, on average, including some restructuring costs.

(Reporting by Bill Rigby; Editing by Meredith Mazzilli and Marguerita Choy)