Skip Links

Microsoft revenue up, aided by Windows unit sales, though profit declines

The results are the first to include Windows 8

By Juan Carlos Perez, IDG News Service
January 24, 2013 09:45 PM ET

IDG News Service - Microsoft reported a drop in profit for the second quarter of its fiscal year, though revenue increased, thanks partly to a 24 percent jump in sales from its Windows division.

Microsoft's revenue increased 2.7 percent to US$21.46 billion in the quarter, which ended Dec. 31.

Net income shrunk to $6.38 billion, or $0.76 per share, from $6.62 billion, or $0.78 per share, in Microsoft's second fiscal quarter of 2011, the company said on Thursday.

CEO Steve Ballmer said in a statement that Microsoft's "big, bold ambition to reimagine Windows," along with other initiatives like its Surface tablet and the new Windows Phone 8, are paying off.

The Windows division generated revenue of $5.88 billion, up 24 percent year on year. However, on a pro forma basis revenue was up only 11 percent, when factoring in a net deferral of revenue for the Windows Upgrade Offer and the recognition of previously deferred revenue from Windows 8 pre-sales.

The Server & Tools business, which includes products like SQL Server and System Center, posted revenue growth of 9 percent to $5.19 billion. System Center revenue was up 18 percent, while SQL Server revenue climbed 16 percent.

The Business Division, which includes the Office suite, reported $5.69 billion in revenue, down 10 percent. Adjusted for the impact of the Office Upgrade Offer and pre-sales, pro-forma revenue rose 3 percent. Revenue from server software including Lync, SharePoint and Exchange hit "double-digit percentage growth." Microsoft is expected to ship a new version of the Office suite this quarter.

The Entertainment and Devices Division, which includes the Xbox products, saw revenue decline 11 percent to $3.77 billion. Microsoft sold 5.9 million Xbox consoles in the quarter, down 28 percent, while its Skype business, also part of this division, saw a 59 percent increase in call minutes.

The Online Services Division, which includes online advertising generated by Web properties like the Bing search engine, increased its revenue 11 percent to $869 million.

Overall, Microsoft said that its pro-forma revenue was $22 billion, when adjusted in part to reflect revenue deferrals for several Windows, Office and video game offers, as well as pre-sales.

In a conference call to discuss the results, CFO Peter Klein called the numbers "solid," and said Microsoft is building momentum behind Windows 8 and Windows Phone 8, and behind upcoming releases like Office 2013 and its Surface Pro tablet.

Microsoft also experienced "strong growth" in multi-year licensing revenue, he said, exceeding 15 percent year on year, a sign that enterprise customers are making long-term bets on the company.

Windows 8 sports a radically redesigned user interface based on tile icons that is optimized for touchscreens found primarily in tablets but also in newer "hybrid" laptops and some desktop PCs, like all-in-one systems.

The new OS started shipping in October, and Microsoft has said it is satisfied with the product's sales, a message that is at odds with skeptical views from market researchers like NPD Group and IDC, as well as financial analysts from Morgan Stanley.

Our Commenting Policies
Latest News
rssRss Feed
View more Latest News