Microsoft reports US$16bn quarter driven by Windows 7 takeup

29 Oct 2010

Widespread enterprise adoption of Windows 7 and Office and the ongoing PC refresh cycle played a significant role in delivering Microsoft a US$16bn first quarter – a 25pc increase on the same quarter last year.

As a result, the company was able to deliver a US$5.4bn profit – up 51pc on last year.

The company said that revenues and profits were affected by having to defer US$1.4bn of revenue due to the Windows 7 Upgrade Option programme and sales of Windows 7 to OEMs and retailers before general availability in October 2009.

Operating income, net income and diluted earnings per share for the quarter were US$7.12bn, US$5.41bn and US$0.62 per share, which represented increases of 59pc, 51pc and 55pc, respectively, when compared with last year’s period.

Without the deferral in the prior year, first-quarter growth rates for revenue and operating income were 13pc and 20pc, and growth in net income and earnings per share were 16pc and 19pc, respectively.

“This was an exceptional quarter, combining solid enterprise growth and continued strong consumer demand for Office 2010, Windows 7, and Xbox 360 consoles and games,” said Peter Klein, chief financial officer at Microsoft.

“Our ability to grow revenue while continuing to control costs allowed us to deliver another quarter of year-over-year margin expansion.”

Office 2010 is off to a fast start with revenue growing over 15pc in its first full quarter and the company said it is continuing to see a healthy and sustaining business PC refresh cycle.

Xbox 360 consoles grew 38pc, outselling every competing console in the US for each of the last four months.

Bada Bing!

Microsoft said its Bing search engine continued to grow market share, while achieving major milestones in implementing the company’s partnership with Yahoo.

“We are seeing improved business demand and adoption. Our enterprise agreement rates were strong, reflecting business commitment to Windows 7, Office 2010 and our server and database products,” said Kevin Turner, chief operating officer at Microsoft.

“Customer demand and excitement for our cloud and commercial online services continue to grow, as demonstrated by major new customer wins this quarter for Windows Azure and by the significant customer interest in our recently announced Office 365 service.”

Microsoft said it reaffirms operating expense guidance of US$26.9bn to US$27.3bn for the full year ending 30 June 2011.

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