Microsoft financials buoyed by gaming, office software

Microsoft tallied US$19.95 billion in revenue for the quarter ending Dec. 31, a record second-quarter high for the company, it said Thursday.

However, revenue growth compared to the same quarter a year ago was moderate, either 5 percent or 15 percent, depending on how the numbers from a year ago are counted.

Microsoft had added on $1.71 billion in deferred revenue, reflecting the pre-order sales of Windows 7 made available in October 2009, in its second-quarter results last year. When this deferred revenue is factored in, second-quarter growth rates for revenue is 5 percent. Without this figure factored in, the growth rate was 15 percent.

The company also rang up $6.63 billion in net income for its second quarter of fiscal 2011. Diluted earnings per share were $0.77 per share, another second-quarter record high.

The company’s gaming and business sales led the growth, according to the company.

Revenue from Microsoft’s Entertainment and Devices Division, boosted by the success of the Kinect sensor and associated Xbox 360 consoles, grew by 55 percent from a year ago. The company noted that 8 million units of Kinect were sold within 60 days of its launch.

Revenue from the Microsoft Business Division grew 24 percent, fueled by the steady demand for Office 2010, released last June. “Office had a huge quarter, exceeding everyone’s expectations,” said Kevin Turner, Microsoft chief operating officer, in a statement.

Microsoft also announced that it has now sold more than 300 million copies of Windows 7 and that the Internet Explorer 9 beta has been downloaded more than 20 million times.

In this quarter, which ended Dec. 31, Microsoft bought back $5 billion in stock and declared $1.3 billion in dividends.

Overall, Microsoft slipped slightly in profits, to $6.63 billion this quarter, down from $6.66 billion a year ago.

“The big surprise is how well the business division did,” said Forrester analyst Andrew Bartels, noting that, in addition to Microsoft Office, Microsoft Dynamics and SharePoint also experienced strong growth in sales.

Strong sales indicate that the market for enterprise software has rebounded after the recessionary doldrums of the past few years. Not only does this bode well for the economy, but this is also good news for Microsoft, which derives most of its revenue from enterprise software sales, Bartels said.

Microsoft’s quarter also harbored some weaknesses as well, Bartels noted. For instance, sales growth of Windows 7 has largely stagnated. “The Windows PC market is slowing quite a bit. It’s hard to say what is going on there, but it is certainly possible that the iPad is hurting PC sales,” he said.

In the Microsoft conference call with analysts to discuss the financial results, Chief Financial Officer Peter Klein admitted during the question-and-answer period that sales of tablets, such as the Apple iPad and the Samsung Galaxy, may have slowed Windows sales overall.

source: agency

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