Microsoft Q4 revenues reach US$20bn – Servers up, Windows down

20 Jan 2012

Microsoft CEO Steve Ballmer

Microsoft delivered what it describes as a solid fourth quarter with revenues up 5pc to US$20bn. Servers & Tools showed strong 11pc growth but its Windows and Windows Live division saw revenues decline 6pc on last year.

In what has been a troubled year for the PC market, Microsoft is clearly banking on ultrabooks, Windows 8 and uptake of its Windows Phone to make a big difference in 2012.

Its foray into unified communications is showing early promise with revenues from Lync, for example, growing 30pc.

“We delivered solid financial results, even as we prepare for a launch year that will accelerate many of our key products and services,” said Steve Ballmer, chief executive officer at Microsoft.

“Coming out of the Consumer Electronics Show, we’re seeing very positive reviews for our new phones and PCs, and a strong response to our new Metro-style design that will unify consumer experiences across our phones, PCs, tablets, and television in 2012.”

Microsoft’s Business Division reported US$6.28bn in second-quarter revenue, a 3pc increase from the prior year period, and a 7pc increase excluding the prior year recognition of deferred revenue for the Office 2010 technology guarantee programme.

Nearly 200m licences of Office 2010 have been sold in the 18 months since launch. Revenue from Exchange and SharePoint grew by 10pc or more over the prior year period, and revenue from Lync and Dynamics CRM grew by more than 30pc.

The Server & Tools business posted US$4.77bn in second quarter revenue, an 11pc increase from the prior year period, reflecting double-digit revenue growth in Windows Server and SQL Server premium editions and more than 20pc growth in System Center revenue.

“We saw strong demand for our business products and services, despite the soft PC market and continuing economic uncertainty in key parts of the world,” said Peter Klein, chief financial officer at Microsoft. “We delivered record earnings per share by continuing to manage our costs while investing for future growth.”

The Windows and Windows Live Division posted revenue of US$4.74bn, a 6pc decline from the prior period. Microsoft has sold more than 525m Windows 7 licences since launch.

The Online Services Division reported revenue of US$784m, a 10pc increase from the prior year period. Bing organic US market share grew to 15.1pc while Bing-powered US market share, including Yahoo! properties, was about 27pc.

The Entertainment & Devices Division posted revenue of US$4.24bn, an increase of 15pc from the prior period. The Xbox 360 installed base now totals about 66m consoles and 18m Kinect sensors. Xbox LIVE now has 40m members worldwide, an increase of 33pc from the prior year period.

“In addition to the continued strength of our commercial business, this holiday season was the strongest in Microsoft history, thanks to good sales execution and compelling products like Xbox 360 and Kinect,” said Kevin Turner, chief operating officer at Microsoft.

“We are seeing a lot of excitement for new devices, from Windows 7 Ultrabooks to new Windows Phones, as well as growing anticipation for Windows 8.”

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years