Microsoft stock drops amid slumping sales

Microsoft Corp., whose Windows software dominates the personal-computer market, fell 6.2 percent Fridayin Nasdaq trading after sales slumped, casting doubt on whether PC demand can hold up in a slowing economy.

The software maker reported a 24 percent drop in sales of Windows last quarter and forecast earnings that may miss analysts' estimates.

PC sales growth has slowed in the U.S. as consumers and businesses curb purchases to cope with economic struggles. That has left Microsoft with a greater proportion of sales in developing countries, where the programs sell at lower prices.

''Not only are they charging less, but the highest growth rates in terms of new PC sales are in emerging markets,'' said Gartner Inc. analyst Neil MacDonald. ''The risk is that Linux gets a foothold and then affects their long-term revenue significantly.''Mortgage crisis

Countrywide founder's

pay may draw scrutiny

Countrywide Financial Corp. founder Angelo Mozilo's $121.5 million gain on stock options and $10.8 million compensation package may draw new scrutiny of executive pay as the Federal Reserve holds hearings next week on the mortgage company's sale to Bank of America Corp.

Mozilo, chief executive officer of the California-based company, exercised options while the stock was falling almost 80 percent in 2007, according to a federal filing Thursday. His package of salary, bonus and other compensation was 79 percent less than in 2006.

Countrywide, the biggest U.S. home lender, agreed to be acquired by Bank of America after losing $703.5 million in 2007 and almost running out of cash. Mozilo and President David Sambol have drawn criticism about their compensation because of the lender's role in helping to create a record number of U.S. foreclosures.

Internet

Fantasy football Web site purchased by AOL

AOL, the Time Warner Inc. Internet unit trying to get more revenue from advertising, has bought the FleaÂflicker Web site for an undisclosed amount to target fantasy sports players.

Fleaflicker, which lets players create fictional NFL teams, has attracted users and advertisers with the popularity of Internet gaming, AOL spokeswoman Alysia Lew said Friday. The free service will operate independently and also will be integrated into AOL's sports site, Lew said.

The purchase comes on top of the almost $2 billion AOL has committed since 2006 to buying online ad companies and Bebo, the third-largest social networking Web site. AOL also said Friday that the number of visitors to its sites for topics such as finance, food and games rose 11 percent to 56.5 million in March, citing figures from researcher ComScore Inc.

Mortgages

Fannie Mae trails Freddie Mac in buying home loans

Fannie Mae, the largest U.S. mortgage-finance company, trails smaller rival Freddie Mac in taking advantage of their newly expanded powers to accelerate purchases of home loans.

Fannie Mae said its portfolio rose at a 2 percent annual rate to $722.7 billion in March and has agreements to add $8.98 billion in mortgage assets this month. Freddie Mac will likely expand its holdings by $34 billion in April after a 5 percent jump to $712.4 billion, according to calculations by Jim Vogel, an analyst at FTN Financial Group.

Fannie Mae's reluctance to add more mortgages is surprising, Vogel said. The company, which typically gets most of its profit from the debt, may miss out on cheaper deals as the gap between mortgage rates and Treasuries narrows, he said. Fannie Mae's portfolio is down 0.7 percent so far this year, company data show.

Telecommunications

FCC frees AT&T from

1980s' accounting rules

The U.S. Federal Communications Commission has freed AT&T Inc. from 1980s-era accounting rules, saying they are no longer necessary to ensure that the carrier charges just and reasonable rates.

AT&T, the biggest U.S. telephone company, can stop giving the FCC a detailed breakdown of costs it incurs to provide each of its services, the FCC said after a 3-2 vote.

The rules required AT&T to distinguish expenses that stem from services subject to regulations such as price caps from those derived from unregulated services. AT&T still must provide that data, on request, if the FCC needs it for future regulatory purposes, the agency said in its order.

The FCC said AT&T still must comply with price caps for regulated services such as traditional phone connections.