Microsoft Still Chasing Apple After 22 Per Cent Profit Jump

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Strong sales of XBox 360 consoles and the Windows 7 operating system have boosted Microsoft profits which are up 22 per cent, to more than $16 billion.

Its earnings of 51 cents per share represented a 50 per cent increase over the same quarter last year and beat, by 5 cents, the estimate of analysts polled in advance by Thomson Reuters.
For the full fiscal year, which ended June 30, the company’s revenues were $62.5 billion, up about 7 per cent from the same period last year — returning to growth mode after last year posting the first annual revenue decrease in its history. However, the result was still less than the double-digit growth that the company often posted prior to the recession of 2008 and 2009.
“Our fourth-quarter results reflect strong product momentum across the whole company, with every business segment delivering double-digit revenue growth,” wrote Peter Klein, Microsoft’s finance chief, in an email to employees. “In addition to delivering strong revenue performance, we continued to exercise financial discipline. Through your focus on controlling costs throughout FY10, we delivered earnings-per-share growth ahead of revenue growth in every quarter this year.”
At the same time, the company felt the effects of its struggles in the mobile market, as costs associated with the discontinuation of the Kin mobile phones helped to drag down the Entertainment & Devices Division to a $172 million loss. The company said cost of revenue increased $251 million in the division, or 38 percent, citing the decision to kill the Kin and increased royalty costs from rising third-party content sales on the Xbox Live marketplace.
In the company’s flagship Windows and Windows Live division, the ongoing rebound of the PC market gave a continued boost to the new Windows 7 operating system, which has now surpassed 175 million licenses sold to date, according to the company’s earnings release. Revenue topped $4.5 billion in the division, an increase of 44 percent, while operating profits increased 59 percent to more than $3 billion.
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