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Microsoft Reports Record Quarterly Revenue

Despite struggling economies worldwide, brisk holiday sales and strong demand push Microsoft’s revenues 5% higher than the same period last year.

Microsoft reported its earnings today, for the quarter which ended December 21, 2011. According to the company, its quarterly revenue was $20.89 billion, a 5% increase over the same period from last year. Operating income, net income, and diluted earnings per share for the quarter were $7.99 billion, $6.62 billion, and $0.78 per share, respectively, compared to $8.17 billion, $6.63 billion and $0.77 per share, for the same period last year.

“We delivered solid financial results, even as we prepare for a launch year that will accelerate many of our key products and services,” said Steve Ballmer, CEO at Microsoft. “Coming out of the Consumer Electronics Show, we’re seeing very positive reviews for our new phones and PCs, and a strong response to our new Metro style design that will unify consumer experiences across our phones, PCs, tablets, and television in 2012.” Although Microsoft has announced that this year’s CES would be the company’s last, the company put forth a good effort and Ballmer’s statement are truthful in my experience. Every OEM and device manufacturer I spoke with—both on and off the record—was excited for Windows 8 (both desktop and mobile variants) and for Microsoft’s prospects in the mobile space. Ultrabooks and tablets running Windows 8 were shown off by numerous manufacturers, as were a myriad of Windows Phone devices.

Steve Ballmer and Ryan Seacrest at CES 2012 Demoing a Windows Phone

If we breakdown the numbers further, the Microsoft Business Division reported $6.28 billion in second quarter revenue, and the Server and Tools business posted $4.77 billion, increases of 3% and 11%, respectively, over the same period last year.

We saw strong demand for our business products and services, despite the soft PC market and continuing economic uncertainty in key parts of the world,” said Peter Klein, CFO at Microsoft. “We delivered record earnings per share by continuing to manage our costs while investing for future growth.”

Continuing the breakdown of the numbers, the Windows and Windows Live Division posted revenue of $4.74 billion (6% decline), the Online Services Division reported revenue of $784 million (a 10% increase), and the Entertainment and Devices Division posted revenue of $4.24 billion (15% increase). In the announcement, Microsoft also reported that approximately 66 million Xbox consoles and 18 million Kinect sensors have been sold to date and that Xbox LIVE now has approximately 40 million members worldwide, which is an increase of 33% over last year.

Although Microsoft’s numbers appear very strong, save for the Windows Live division, the company is revising operating expense guidance downward to $28.5 - $28.9 billion for the full year, which ends on June 30, 2012. The downward revision hints at Microsoft’s likely plan to launch Windows 8 sometime in the second half of next year, after the current fiscal year ends.

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