14 DAY TRIAL // As expected, Microsoft reported strong results for the past fiscal quarter, beating analyst estimates, which had forecasted a 12% growth. Instead, revenue for the quarter ended Mar. 31, 2011, increased by 13% compared to Q3 2010, to no less than $16.43 billion.
And while Windows did manage to steal the limelight from other divisions, fact is that it did so for all the wrong reasons.
Despite the fact that Windows 7’s immense success continues to show great momentum in terms of sales, revenue for the division took a small dip.
Microsoft recently announced that in excess of 350 million licenses of Windows 7 were sold in the first 18 months since general availability. Still, the segment’s revenue dropped by 4% to $4.4 billion, down from $4.7 billion a year ago.
The software giant cited PC market trends for the drop in Windows revenue, especially the growth of Tablet PC sales in the detriment of full computers and especially netbooks.
Windows profitability is intimately connected to the success of OEM PC sales worldwide, with over 80% of revenue for this business coming from copies of the platform pre-loaded on new PCs. And with global PC sales down from 1% to 3 % in the past quarter according to IDC, all eyes were on Windows, expecting the revenue dip.
“We delivered strong financial results despite a mixed PC environment, which demonstrates the strength and breadth of our businesses,” revealed Peter Klein, chief financial officer at Microsoft. “Consumers are purchasing Office 2010, Xbox and Kinect at tremendous rates, and businesses of all sizes are purchasing Microsoft platforms and applications.”
Office, Xbox and Kinect were in fact credited for the increase in revenue this quarter by Klein.
According to the Redmond company, Microsoft Business Division’s revenue grew by 21% to $5.25 billion, mostly thanks to sales of Office 2010.
Sales of Xbox 360 consoles and Kinect NUI sensors produced revenue of $1.94 billion, up 60% over Q3 2010 for the Entertainment & Devices Division.
The company’s Server & Tools Division (with products such as Windows Server 2008 R2, SQL Server 2008 R2, and System Center) also posted revenue growth, no less than 11%, and is now up to $4.1 billion.
“We delivered strong third quarter revenue from our business customers, driven by outstanding performance from Windows Server, SQL database, SharePoint, Exchange, Lync and increasingly our cloud services,” added Kevin Turner, chief operating officer at Microsoft.
“Office had another huge quarter, again exceeding everyone’s expectations, and the addition of Office 365 will make our cloud productivity solutions even more compelling. We continue to see strong adoption of our cloud-based services among the Fortune 500.”
Overall, Microsoft’s $16.43 billion revenue for Q3 2011 translates into operating income, net income, and diluted earnings per share of $5.71 billion (up 10%), $5.23 billion (up 31%), and $0.61 per share (up 36%) respectively.