Microsoft Bullish Despite Windows Fall But Can W 8 Crack It?

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Software giant remains bullish despite profit slip and lower Windows sales.


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Wndows 8 coming, but can Microsoft crack it?

Microsoft just announced their results for quarter to Dec 31 today, which saw profit and incomes slip, although revenues jumped 5%.

Profits for Oct-Dec period 2011 was down 0.2% to $6.62bn – down on last year’s $6.63bn figure.

Demand for Microsoft products was strong, despite a fall in Windows sales, due in part to the decline in PC sales and the dreary economic outlook.

CFO Peter Klein also referred to the “growing anticipation for Windows 8”, which the giant hopes will reignite its fortunes in the tabs sector.

The latest figures were roughly in line with analyst expectations.

Operating income also fell to $7.99bn – down considerably from $8.17bn income recorded a year ago, while Microsoft revenues rose 5% to $20.89bn.

Diluted earnings per share was $0.78 per share – down $0.01c.

Prior year results includes recognition of $224m of deferred revenue related to the Office 2010 technology guarantee program, Microsoft said, and Chief Ballmer remained positive for the year ahead – a key one for the software giant as it prepares to launch an assualt on Android and Apple via Windows 8, tablets, and Nokia smartphones on W7.

 


Windows and Windows Live Division posted revenue of $4.74 billion, a 6% drop. Nearly 200m licenses of Office 2010 have been sold since launch 18 months ago and 525m Windows 7 licenses since its launch.

“We delivered solid financial results, even as we prepare for a launch year that will accelerate many of our key products and services,” said CEO Steve Ballmer, who’se zany sppech at CES last week left many wondering.

“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,” he added.

Overall, its other businesses were in good shape, Microsoft’s Business Division reported $6.28 bn revenue, a 3% increase from 2010 (7% increase excluding deferred revenue for the Office 2010 guarantee program).

Revenue from Exchange and SharePoint grew by 10% “or more” while Lync and Dynamics CRM grew by more than 30%.

Server & Tools business posted $4.77 bn revenue, up 11%, “reflecting double-digit revenue growth in Windows Server and SQL Server premium editions and more than 20% growth in System Center revenue” Microsoft said.

“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 Online Services Division reported revenue of $784 million, a 10% increase from the prior year period. Bing organic US market share grew to 15.1% while Bing-powered US market share, including Yahoo! properties, was approximately 27%.
Entertainment & Devices Division, which includes its Xbox and Kinect rose 15%  to $4.24 billion revenue.

There are now approx 66 million Xbox 360 owners and 18 m Kinect, the gamer said and Xbox LIVE now has 40 million members worldwide.

 
“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, Microsoft’s chief operating officer.

“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.”

Microsoft is revising operating expense guidance downward to $28.5 bn to $28.9 bn for the full year ending June 30, 2012.

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