PC not dead: Microsoft's results better than expected

PC not dead: Microsoft's results better than expected

Summary: Microsoft's latest quarterly results -- revenues up by 6 percent to $17.41 billion for the quarter ended March 30 -- have beaten Wall Street expectations, with one analyst, Josh Olson, telling Reuters: "Perhaps the demise of the PC is not as great as everyone is anticipating here.

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TOPICS: Tech Industry
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Microsoft's latest quarterly results -- revenues up by 6 percent to $17.41 billion for the quarter ended March 30 -- have beaten Wall Street expectations, with one analyst, Josh Olson, telling Reuters: "Perhaps the demise of the PC is not as great as everyone is anticipating here."

The earnings release shows profits dipped slightly to $5.11 billion, but the year-earlier results had included a tax benefit worth $461 million. Operating income actually grew by 12 percent to $6.37 billion. In after-hours trading, Microsoft's shares jumped by 2.8 percent to $31.90.

The Server & Tools division was the star, growing revenues by 14 percent to $4.57 billion. (See table below.)

The Windows & Windows Live division did reasonably well, considering the weak PC market, with sales growing by 4 percent to $4.62 billion. Microsoft said business sales were stronger than consumer sales, and that Windows 7 was now on 40 percent of enterprise desktops.

The very profitable Business division, led by Microsoft Office, increased its sales by 9 percent to $5.81 billion.

However, the Entertainment & Devices Division (EDD) saw sales slump by 16 percent to $1.62 billion, and it reported a loss of $229 million compared to a $210 million profit last year. Microsoft blamed this reversal on a weak games console market, though the division also includes mobile phones.

Online services, which includes the Bing search engine, continued to be a disaster. Revenues grew by 6 percent to $707 million, and Microsoft made a loss of $479 million. However, this was a significant improvement on the $776 million loss it made in the same quarter last year.

Microsoft said it was continuing to strengthen its enterprise software offerings, and said strong sales of SQL Server 2012 contributed to results.

Microsoft has an "unprecedented refresh" coming this year, with new versions of Windows, Windows Server, Microsoft Office and many other products, which should increase sales. These refreshes may well be preceded by lacklustre quarters. In this case, Microsoft's slightly better-than-expected results have lightened the general air of gloom and doom.

@jackschofield

Note: For Josh Olson's full statement and other analyst comments, see Reuters' Instant View: Microsoft hitches ride on resilient PC market

 Microsoft Earnings table Q3

Topic: Tech Industry

Jack Schofield

About Jack Schofield

Jack Schofield spent the 1970s editing photography magazines before becoming editor of an early UK computer magazine, Practical Computing. In 1983, he started writing a weekly computer column for the Guardian, and joined the staff to launch the newspaper's weekly computer supplement in 1985. This section launched the Guardian’s first website and, in 2001, its first real blog. When the printed section was dropped after 25 years and a couple of reincarnations, he felt it was a time for a change....

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  • The upsurge in Windows sales is easy enough to explain. I think any CEO/CIO that's seen the Windows 8 beta will be barking "get us all the Windows 7 licences we'll ever need, and I mean *right now*!" at their Purchasing Department for all they're worth!

    You're sometime colleague at the Guardian, Mr Arthur, puts Microsoft's results in perspective:

    "Apple's market value is now comfortably twice that of Microsoft, and revenues from its iPhones last quarter exceeded Microsoft's overall revenue."
    BrownieBoy-4ea41
  • Ouch! "Your some time colleague".
    BrownieBoy-4ea41