Sales of Office 2010 to businesses buoyed the results, as did the popularity of Kinect, Microsoft's new motion-sensing controller for the Xbox 360 video game system.

The results for October through December leaked online more than an hour before they should have been released, prompting a temporary spike in trading before the markets closed. After investors had time to digest the full report, however, it became clear that a solid quarter isn't enough to give the company's shares more than a temporary lift. Companies carefully time the release of key financial information to comply with complex Securities and Exchanges Commission rules.

Much of Microsoft's business depends on selling copies of the Windows operating system and Office desktop software, both of which are tied to the health of the personal computer market.

Revenue in the Windows division plunged 30 percent to $5.1 billion. Microsoft launched Windows 7 in the same quarter of 2009, making for a tough comparison. Meanwhile, in the 2010 quarter, worldwide personal computer shipments only grew about 3 percent as Apple Inc.'s iPad and the promise of more tablet devices to come made consumers think twice about what kind of device to buy.

Meanwhile, investors traded with caution ahead of Friday's release of U.S. growth data in the October-December quarter.

Japan's benchmark Nikkei 225 stock average lost 96.69 points, or 0.9 percent, to 10,381.97 in the morning session. Investors dumped shares in banks, which own large amounts of government bonds.

Mitsubishi UFJ Financial Group, Japan's biggest bank, fell 3 percent to 432 yen ($5.2). Mizuho Financial Group, Japan's No. 2 banking group, declined 3 percent to 159 yen. Sumitomo Mitsui Financial Group was down 2.3 percent at 2,851 yen.

Australia's S&P/ASX 200 was down 0.5 percent at 4,884.10. South Korea's Kospi declined 0.7 percent to 2,099.62.

Standard & Poor's slashed Japan's credit rating for the first time in almost nine years Thursday, issuing a harsh critique of the government's ability to control its ballooning debt.

First-time applications for unemployment rose to 454,000, the highest level since late October. Economists had expected the number to rise to 407,000. Snowstorms in some parts of the country forced companies to lay off workers, economists said.

Caterpillar Inc. rose 0.8 percent after its fourth-quarter profit quadrupled on strong global demand for mining and construction equipment. Time Warner Cable Inc. gained 2 percent after raising its dividend thanks to a 22 percent jump in income last quarter.

AT&T Inc. fell 3 percent, the largest drop in the 30 companies that make up the Dow Jones industrial average. The company reported that new wireless contracts fell to the lowest level in more than five years.

Procter & Gamble Co., the maker of consumer products like Tide detergent, fell 2.9 percent after it failed to meet analyst's expectations.

The Dow Jones industrial average inched up 2 points, or less than 0.1 percent, to 11,987. The index broke through the 12,000 mark yesterday for the first time since June 2008 before slipping in the late afternoon.

Bank of America Corp. intends to give some investment bankers a greater share of their bonuses in cash, the latest Wall Street compensation move roiling banking chieftains as they meet in Davos, Switzerland.

Last year the highest-paid bankers at the nation's largest bank by assets received as little as 5% of their payout in cash. Now bankers and traders making more than $5 million are getting as much as 30% of their 2010 compensation in cash and at least 70% in deferred stock, according to people familiar with the situation. Some could see a stock award of as much as 80% and 20% in cash.

Last year's level of cash was unusually low because the bank was restricted by federal pay rules as a condition of the $45 billion it received in U.S. aid.

"We feel that our pay practices are fair and appropriate for our employees and our shareholders," a spokesman said.

Still, multiple bankers gathered at the World Economic Forum in Davos grumbled that Bank of America would increase the cash portion of bonuses—news that traveled fast once the bank's employees were told.

Goldman's move shows how banking has become so international that companies can sidestep the SEC's rules with ease. It also shows that the commission's rules regarding stock sales are crippling for U.S. investors.

Facebook will raise just as much capital, $1.5 billion, as was planned originally. The terms of the deal are also the same: Investors will still put up a minimum of $2 million and commit to hold the shares until 2013.

The deal won't hurt Goldman either—it will earn at least as much in fees and commissions as before. The reality is that investment banks like Goldman have been moving brokerage and banking business offshore for decades. They are well positioned in Asian and European capitals to continue to do so.