Microsoft's Q1 shines; Enterprise rolls along; Windows 8.1 wait and see

Microsoft's first quarter was much better-than-expected as it sold Windows 8.1 into devices for the holiday season and benefited from continued strength in the enterprise.

The company reported first quarter earnings of $5.24 billion, or 62 cents a share, on revenue of $18.53 billion.

Wall Street was looking for first quarter earnings of 54 cents a share on revenue of $17.79 billion.

Overall, Microsoft's quarter fared well---especially considering the glum expectations going into the results. Steve Ballmer, outgoing CEO of Microsoft, said the company's new commercial services "will help us continue to outgrow the enterprise market." He added that there is consumer excitement for Xbox One, Surface and Windows 8.1 devices. The Xbox excitement isn't questioned, but the latter two categories are debatable for now.

On the consumer side, Windows revenue fell 7 percent, Surface revenue was $400 million and search ad sales surged 47 percent. Total device and consumer revenue was $7.46 billion, up 4 percent from a year ago.

Commercial sales were up 10 percent in the first quarter to $11.20 billion. SQL Server revenue and productivity tools also grew at a healthy clip. Microsoft said commercial cloud revenue was up 103 percent.

Here's a look at the new Microsoft reporting structure and the sales tally.

 You may also need a crib sheet on those new segments. Here's a look at what Microsoft lumps into those categories. 

Based on those new segments, the historicals highlight where the growth resides. For instance, commercial licensing is a bright spot and devices and consumer licensing is flattish at best. 

In its earnings presentation, Microsoft outlined a few other nuggets. The company outlined its inventory levels---a large issue given that Microsoft is becoming a hardware company too.

Microsoft said that its inventory surged 61 percent from a year ago due to the Surface launch as well as filling the channel with Xbox One ahead of a November launch.

The company also outlined the following:

• Two-third of new Dynamics CRM customers are going cloud.

• Bing is improving its revenue per search and Microsoft said it has more than 2 million Office 365 Home Premium subscribers.