After three strong quarters and against a backdrop of heady expectations, Microsoft came in with lighter-than-expected fiscal Q3 revenues of $14.45 billion Thursday, earnings of $4.38 billion, or 47 cents a share, and operating income of $4.41 billion.

Earnings were off 11% against a hard compare. Last Q3 they ballooned because of Microsoft recognized $1.67 billion in revenues and profits deferred by delays in releasing Vista.

However, even allowing for that weird year-over-year compare Windows client software was down 24% to $4 billion – 4% more than the 18%-20% Microsoft was figuring on – and its Office unit was off 1.7% to $4.75 billion.

Microsoft complained that piracy was up in Asia, particularly, it appears, in China and CFO Chris Liddell said there was a weakness mature markets. He denied that there were any “Vista-related issues” in the third quarter.

This year Microsoft also took a charge of $1.42 billion, or 15 cents a share, to cover the cost of the latest European Commission fine.

Earnings were still better than the 44 cents widely expected. It was the flat revenues and the Q4 forecast that bothered Wall Street and sent Microsoft stock down 5% after-hours.

The entity most concerned about Microsoft’s stock price is probably Yahoo because half of the $31 a share Microsoft is offering for the joint is payable in stock and Yahoo needs Microsoft to be at close $33 to realize even that rejected number. Microsoft lost market traction when it announced its bid and is now around 30 bucks.

Microsoft said it expects to earn 45 cents-48 cents this quarter on revenues of $15.5 billion to $15.8 billion. Operating income is expected to be in the range of $5.8 billion to $6.2 billion. Expectations were for 48 cents on $15.56 billion.

In a first glimpse at what it thinks it can do in its next fiscal year, which starts in July, it said it figured it would see earnings up 13%-18% to $2.13-$2.19, up from $1.86-$1.89 this year, on revenues of $66.9 billion-$68 billion. Operating income is expected to be in the range of $26.7 billion to $27.4 billion. The Street had Microsoft at $2-$2.20 next year on revenues of $66.5 billion.

Microsoft said its Server and Tools revenue grew 18% in the March quarter and Entertainment and Devices revenue was up 68% driven by demand for Xbox 360 consoles.

Online services sales were up 40% with a loss of $228 million, even with the aQuantive acquisition, which is why Microsoft wants to buy Yahoo.

Liddell repeated CEO Steve Ballmer’s threat to walk or go hostile if Yahoo doesn’t start dealing this weekend and said he doesn’t countenance raising the bid, Yahoo is losing market share, he said, writing off its latest quarter as nothing much.

If Microsoft doesn’t spend $44 billion on Yahoo, Liddell said, it would put the money into organic growth and allowed for the possibility of other acquisitions.