Microsoft boasts record revenue but falls further behind Apple

Apple $11 billion ahead of Microsoft in quarterly revenue

On the strength of Microsoft Office and Windows Server sales, Microsoft today reported "record [quarterly] revenue of $17.37 billion" and profits of about $6 billion, but the gap between Microsoft and Apple continued to grow in Apple's favor.

Just two days ago, Apple reported quarterly revenue of $28.57 billion, or $11 billion more than Microsoft. Last quarter, the gap was about $8 billion, and even that was impressive after many years in a row of Microsoft trouncing Apple in revenue and profit. 

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In today's earnings, Microsoft reported $6.17 billion in operating income and $5.87 billion in net income. Apple, meanwhile, reported net profit of $7.31 billion, again widening the gap between the two tech companies. 

Microsoft's results are for the fourth quarter of Redmond's 2011 fiscal year. Year-end numbers for the company include $69.94 billion revenue, $27.16 billion operating income and $23.15 billion net income. Apple still has one fiscal quarter to go before it reports year-end earnings.

Microsoft can still boast more cash-making ability than rival Google, whose most recent quarter featured $9.03 billion in revenue and $2.88 billion in operating income. 

"Throughout fiscal 2011, we delivered to market a strong lineup of products and services which translated into double-digit revenue growth, and operating margin expansion," Microsoft CFO Peter Klein said in the company's earnings release. "Our platform and cloud investments position us for long-term growth."

The Microsoft Business Division grew revenue 7% in the quarter and 16% for the full year on the strength of Office 2010, which has sold more than 100 million licenses. 

Server & Tools grew 12% in the quarter and 11% for the year, driven by Windows Server, System Center and SQL Server.

The Windows and Windows Live division saw revenue decline 1% for the quarter and 2% for the full year. That's likely due to slowing Windows 7 sales, but next year's expected launch of Windows 8 could boost the desktop OS division once again. 

"Excluding the impact of the prior year Windows 7 launch and revenue deferral, we estimate full-year revenue growth was in line with PC market growth of 2% to 4%," Microsoft said.

The PC market, of course, has been affected slightly by the success of Apple's iPad, with even Apple admitting that iPad sales are cutting into Mac sales.

Microsoft's Entertainment & Devices division is continuing to get stronger, with 30% quarterly growth and 45% yearly growth, because of the Xbox 360, Kinect and Xbox Live. For the full year, Entertainment & Devices pulled in about $9 billion in revenue, compared with $22 billion for the Microsoft Business Division, $19 billion for Windows and $17 billion for Server & Tools.

Once again, the Online Services division is the only one to lose money, posting a $728 million quarterly loss and $2.6 billion yearly loss. 

Follow Jon Brodkin on Twitter.

Copyright © 2011 IDG Communications, Inc.

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