Microsoft reports US$16.4bn in Q3 revenues

29 Apr 2011

Strong sales of Office 10, Xbox 360 and Kinect technology drove a 13pc increase in Microsoft’s Q3 revenues of US$16.43bn. The company reported a profit of US$5.2bn, up 31pc.

Operating income, net income and diluted earnings per share for the quarter were US$5.71bn, US$5.23bn, and US$0.61 per share, which represented increases of 10pc, 31pc and 36pc, respectively, when compared with the previous year.

“We delivered strong financial results despite a mixed PC environment, which demonstrates the strength and breadth of our businesses,” said 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.”

Microsoft Business Division revenue grew 21pc year-over-year. Since its release last spring, Office 2010 has become the fastest-selling version of Office in history, and the integrated innovation with SharePoint, Exchange, Lync and Dynamics CRM is driving significant growth for the division.

Server & Tools revenue grew 11pc year-over-year, the fourth consecutive quarter of double-digit growth. Strong business adoption of Windows Server 2008 R2, SQL Server 2008 R2 and System Center are driving record revenue and margin expansion.

Windows 7 remains the fastest-selling operating system in history, with 350m licenses sold. Revenue for the segment was down 4pc in the third quarter, in line with the PC trends, excluding prior year launch impact.

Online Services Division revenue grew 14pc year-over-year primarily, driven by increases in search revenue. Bing’s US search share increased to 13.9pc this quarter.

Entertainment & Devices Division grew 60pc year-over-year, fuelled by Kinect for Xbox 360, the fastest-selling consumer electronics device in history, continued strong Xbox 360 console sales and growth of Xbox Live.

“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,” said 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.”

Apple overtakes Microsoft in profits

Despite the solid performance, Microsoft’s results drew inevitable comparisons in various reports with Apple’s results last week, particularly the fact that for the first time since 1990 Apple is now more profitable than Microsoft. Apple in recent weeks reported a 95pc jump in profits reporting US$6bn profits on revenues of US$24.7bn.

It’s a long way since Apple had to swallow its pride in 1996 to accept investment from Microsoft to stay alive.

Key to Apple’s success no doubt are sales of iPad and iPhone devices. But it’s like comparing apples (no pun intended) with oranges in some respects. Microsoft can pride itself in the fact that Windows 7 is the fastest-growing OS in history, bringing in revenues of US$4.5bn, and Windows 8 is coming in September and expectations are that it will run on various tablet devices.

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