Microsoft fiscal Q2 revenue miss estimates thanks to Windows

Microsoft fiscal Q2 revenue miss estimates thanks to Windows

Summary: The Windows and Windows Live Division was the only unit that declined from the previous quarter, posting a revenue of $4.74 billion, down 6 percent.

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As the world waits for Windows 8, Microsoft is slightly suffering as it fell just below one of Wall Street's predictions for the second fiscal quarter -- although it did post higher earnings than expected and shares climbed in after-hours trading.

Microsoft reported a second fiscal quarter net income of $6.62 billion, or 78 cents a share (statement). Non-GAAP earnings were 79 cents a share on a revenue of $20.89 billion -- a 5 percent increase from the prior year.

Yet, Microsoft missed on the revenue mark. Wall Street was expecting Microsoft to report earnings of 76 cents a share on revenue of $20.93 billion.

See also: Microsoft's second quarter: Hurry up and wait for Windows 8

In prepared remarks, CEO Steve Ballmer focused on what's to come from Microsoft this year, asserting that will "accelerate many of our key products and services."

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.

The Windows and Windows Live Division was the only unit that declined from the previous quarter, posting a revenue of $4.74 billion, down 6 percent.

Yet the Entertainment division did considerably better with an increase of 15 percent with a revenue of $4.24 billion. The Xbox 360 installed base now totals approximately 66 million consoles and 18 million Kinect sensors.

Microsoft is expected to report earnings of 60 cents a share on revenue of $17.5 billion for its fiscal third quarter.

Microsoft downgraded its operating expense guidance downward to between $28.5 billion and $28.9 billion for the full year ending June 30, 2012.

By the numbers:

  • Microsoft has sold over 525 million Windows 7 licenses since launch. Microsoft has sold over 525 million Windows 7 licenses since launch.
  • Xbox LIVE now has 40 million members worldwide, a 33 percent increase from the prior year period.
  • The Microsoft Business Division reported $6.28 billion in second quarter revenue, a 3 percent increase from the prior year period
  • Nearly 200 million licenses of Office 2010 have been sold in the 18 months since launching.
  • Bing's organic U.S. market share grew to 15.1 percent, while the Bing-powered U.S. market share, including Yahoo properties, was approximately 27 percent.

Correction: The headline was amended to read "revenue" instead of "earnings."

Related:

Topics: Banking, E-Commerce, Enterprise Software, Microsoft

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47 comments
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  • RE: Microsoft fiscal Q2 earnings miss estimates thanks to Windows

    Something is wrong here: 78 cents per share is greater than Wall Street's expectations of 76 cents per share. How is that a miss?
    archerjoe
    • RE: Microsoft fiscal Q2 earnings miss estimates thanks to Windows

      @archerjoe Yeah, how is Microsoft "suffering" with numbers like that? A lot of companies would love to have those numbers!
      donpar@...
    • Nothing wrong, ZDNet has been Anti-MS for a long long time.

      It's the only site where a postive earnings report on MS with the only lagging sector being due to Taiwan flooding and out of MS control, can be turned into a negative headline. ZDNet, you don't think that is wrong?
      The larger part of your lineup and stories that make headlines has been ABN for years, but isn't this just basically saying you don't even care at all about ethics at this point?
      I have read misleading headlines that were purposely intended to cast a shadow over MS and read so many MS rants by people like Robin Harris for example, and knew the site was a Slashdot wannabe, but this is beyond that, it's beyond misleading.
      xuniL_z
    • I couldn't work that one out either

      I must be missing something somewhere.
      Laraine Anne Barker
    • RE: Microsoft fiscal Q2 earnings miss estimates thanks to Windows

      @archerjoe I think the article was written before the results were announced.
      nishsingh
    • RE: Microsoft fiscal Q2 earnings miss estimates thanks to Windows

      @archerjoe The street also expected 20.92 Billion. But yeah, everyone says they hit the spot....
      DreyerSmit
  • RE: Microsoft fiscal Q2 earnings miss estimates thanks to Windows

    Sure wish you knew what you were talking about before you blog. MS didn't miss anything
    TGGR
  • MS up.. Google down...

    MS up.. Google down.. a sign of things to come?
    techsdfdsblogger
  • CNBC vs ZDNET

    CNBC: Microsoft Beats Earnings Forecast; Shares Rise
    ZDNET: Microsoft fiscal Q2 earnings miss
    techsdfdsblogger
    • It got us here pointing out her mistake

      @techblogger
      and so she gets paid.

      Maybe she is doing this on purpose? I
      William Farrel
      • That is a possibilty

        @William Farrel
        as she does not get many replys when she talks accurately on other subjects she has done in the past.
        :|
        Tim Cook
  • RE: Microsoft fiscal Q2 earnings miss estimates thanks to Windows

    Yeah this story is misleading MS was inline with expectations, and its share prices are up slightly in after hours trading.
    Shmythey
  • RE: Microsoft fiscal Q2 earnings miss estimates thanks to Windows

    im getting tired of ZDNET wrong article, very disapointing
    SylvainT
  • "As you can see, Foxxcom is not on the list"

    She doesn't miss a thing:

    www.bloomberg.com/news/2012-01-19/microsoft-profit-tops-estimates-on-xbox-demand.html?cmpid=msnmoney
    William Farrel
    • I have to agree with you

      @William Farrel
      this is not the first time she has made an incorrect statement.
      :|
      Tim Cook
  • Wall Street - lol

    I so sick of Wall Street - pretty much solely responsible for the financial fiasco over the last several years and they get 'upset' over what is clearly NOT a miss by Microsoft.
    Microsoft did just fine.
    markhooper
    • RE: Microsoft fiscal Q2 earnings miss estimates thanks to Windows

      @markhooper

      What are you talking about? Bloggers are painting the picture the wrong light. Wall Street thinks Microsoft did fine -- just look at their stock, it's up after hours. It's the bloggers who think the iPad, Android tablets, etc. are 'devouring' Windows alive when the cause for the dip was hard drive shortages, not because of some tablets people use in tandem with desktops.

      If you haven't noticed, most bloggers go out of their way to make it appear like Microsoft is a sinking ship, when that couldn't be further from the truth.
      ian.aldrighetti
  • RE: Microsoft fiscal Q2 earnings miss estimates thanks to Windows

    Everything increased except PC sales and that's do to hardware shortage which Microsoft can't control. Microsoft is still on track!
    Loverock Davidson-
  • RE: Microsoft fiscal Q2 earnings miss estimates thanks to Windows

    Very Dissappointed in Rachel King's reporting, her math is out to lunch, Microsoft beat and is rising on the market. Sounds like Rachel is siding with Apple or something?
    calwoosnam@...
  • PC market declined due to Apple

    There is no other reason. Let's see what Apple's sales GROWTH last quarter was. Some are predicting another record quarter, 5 million Macs. Windows is finally so OVER! Buh-bye.
    mlindl