Microsoft earnings: 'Exceptional demand' for Windows 7 stokes bottom, top lines
Updated: Windows 7 powered Microsoft to a record fiscal second quarter.
The company on Thursday reported net income of $6.66 billion, or 74 cents a share, on revenue of $19.02 billion. The results include $1.71 billion in Windows 7 deferred revenue. That added 14 cents a share to Microsoft's bottom line.
The view of the quarter depends on whether you discount the deferred revenue impact or not. The company was expected to report second quarter earnings of 59 cents a share on revenue of $17.9 billion. If you factor out the deferred revenue, Microsoft's earnings beat projections, but revenue could be seen as light.
In a statement, Microsoft said Windows 7 demand was "exceptional." Microsoft said it sold more than 60 million Windows 7 licenses.
The outlook from Microsoft boiled down to this: We'll do as well as the PC market.
By the numbers for the second quarter:
- Windows and the Windows Live division had operating income of $5.39 billion on revenue of $6.9 billion. That was up from operating income of $2.71 billion on revenue of $4.06 billion in the second quarter a year ago.
- Server and tools had operating income of $1.49 billion on revenue of $3.84 billion.
- Microsoft's business division (think Office) delivered second quarter operating income of $3.01 billion on revenue of $4.74 billion.
- The entertainment and devices division delivered an operating profit of $375 million on revenue of $2.9 billion.
- And the online service unit remains the laggard. The online unit lost $466 million on revenue of $581 million. In the same period a year ago, Microsoft's online unit lost $320 million on revenue of $609 million. Simply put, the online unit's financial performance continues to decline.
