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Record revenue for Microsoft, but OS sales down

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Although Microsoft has announced a 13% increase in third-quarter revenue to $16,43-billion, for the quarter ended 31 March, sales of its core operating system have slipped as users shift from buying PCs to tablets.

The software vendor’s operating income, net income, and diluted earnings per share for the quarter were $5,71-billion, $5,23-billion, and $0,61 per share, which represented increases of 10%, 31%, and 36%, respectively, when compared with the prior year period. Diluted earnings per share included a $0,05 tax benefit primarily related to an agreement with the US Internal Revenue Service to settle a portion of their audit of tax years 2004 to 2006.
“We delivered strong financial results despite a mixed PC environment, which demonstrates the strength and breadth of our businesses,” says 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 21% 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 11% 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 sold 350-million license, with revenue for the segment down 4% in the third quarter.
Online Services Division revenue grew 14% year-over-year primarily driven by increases in search revenue. Bing’s US search share increased to 13,9% this quarter.
Entertainment & Devices Division grew 60% year-over-year, fueled 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,” says 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.”