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Microsoft earnings get boost from Xbox, Office

by Byo24NEWS
28 Jan 2011 at 02:06hrs | Views
Microsoft beat Wall Street's expectations today with its fiscal second quarter earnings.

For the three months ended December 31, Microsoft earned $19.95 billion in revenue, or 77 cents per share, on $6.63 billion of net income. Analyst estimates from earlier in the week had pegged the software giant's revenues at 69 cents per share on $19.2 billion in revenue.

In the same quarter last year, Microsoft earned 74 cents per share on revenue of $19 billion, though that included $1.7 billion in sales that had been deferred from the previous quarter because of Microsoft's Windows 7 coupon program. Not including that deferment from last year's numbers during the same quarter, Microsoft said that its second-quarter growth rate for revenue was 15 percent, with earnings at 28 percent.

The star of the quarter was Microsoft's Entertainment and Services division, which saw a 55 percent growth, bolstered by breakout sales of the Kinect at more than 8 million units and the Xbox 360 console, which topped 6.3 million unit sales. Microsoft also attributed the group's success to subscriptions of Xbox Live, which went up 30 percent year over year, and strong Xbox game sales.

"We are enthusiastic about the consumer response to our holiday lineup of products, including the launch of Kinect. The 8 million units of Kinect sensors sold in just 60 days far exceeded our expectations," Peter Klein, chief financial officer at Microsoft, said in a statement.

Also pushing high, double-digit growth was Microsoft's Business Division, which grew 24 percent year over year. Microsoft attributed some of that success to Office 2010 being the fastest-selling version of the software suite for consumers. The group also posted a 9 percent growth in its multi-year licensing revenue, as well as double-digit growth of revenue from its SharePoint, Lync, and Dynamics CRM products.

Missing entirely from Microsoft's earnings release was mention of Windows Phone 7, which launched in Europe and Australia in late October, and in North America in early November. Yesterday Microsoft announced sales of 2 million of the devices since its launch, though that was to mobile operators and retailers and not necessarily customers. During the company's conference call, Microsoft chief financial officer Peter Klein said that the company was pleased with the initial response, but that the company still has "a long road ahead of us."

As for PC sales - something of interest to analysts and investors alike given recent reports of a sales slowdown - Microsoft said that the total OEM revenue growth was 2 percent for the quarter. That's including an adjustment for last year's deferred revenue from Windows 7. Going into the next quarter, Microsoft said it anticipates segment revenue in Windows and Windows live to be in line with PC market growth. Even so, the company said that it's now sold more than 300 million licenses of Windows 7, making it the fastest selling operating system ever.

Meanwhile, Microsoft's Online Services Division, which includes Bing, MSN, and the company's advertiser and publisher tools, posted a $543 million loss. That's slightly better than last quarter's $560 million, but not by much.

Source - Byo24NEWS

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