Microsoft rides enterprise to Q3 success

Microsoft delivered a strong fiscal third quarter as the software company's enterprise line-up — SQL Server, System Center and products like Lync and Dynamics CRM — carried the team.

Microsoft delivered a strong fiscal third quarter as the software company's enterprise line-up — SQL Server, System Center and products like Lync and Dynamics CRM — carried the team.

The company reported third-quarter earnings of US$5.11 billion, or 60 cents per share, on revenue of US$17.41 billion. Wall Street was expecting Microsoft to report earnings of 57 cents per share on revenue of US$17.18 billion. As for the outlook, Microsoft said it is cutting its operating expense guidance.

Overall, the quarter played out about the way analysts projected; Microsoft's business tools carried the quarter. Microsoft's server and tools unit saw revenue jump 14 per cent from a year ago to US$4.57 billion. SQL Server revenue was up double digits, and System Center sales surged 20 per cent. Operating income for the servers and tools unit was US$1.74 billion.

Microsoft's business division delivered third-quarter revenue of US$5.81 billion, up 9 per cent from a year ago. Office upgrades continue, and Dynamics revenue jumped 11 per cent. Operating income for the business division was US$3.77 billion.

Windows revenue also held its own, with sales of US$4.62 billion, up 4 per cent from a year ago. Microsoft said that enterprise upgrades continue. Indeed, Gartner recently reported that PC sales weren't as bad as originally thought. Windows operating income was US$2.95 billion.

In a statement, Microsoft CEO Steve Ballmer touted a series of product launches leading up to Windows 8 and the next-generation Office.

As expected, Microsoft's online unit continues to lose money, but the software giant cut its losses. For instance, Microsoft's online unit lost US$479 million in the third quarter on revenue of US$707 million. That's still a big chunk of change, but an improvement on the US$776 million lost in the third quarter a year ago.

Here's a snapshot of Microsoft's units and the profit and loss statements:

Microsoft results

(Credit: Microsoft)

By the numbers:

  • Microsoft ended the quarter with US$6.38 billion in cash and equivalents

  • The entertainment and device division reported a third-quarter operating loss of US$229 million on revenue US$1.61 billion. Xbox remains the top gaming console

  • Research and development spending was US$2.517 billion in the quarter, up from US$2.27 billion a year ago. For the nine months ended 31 March, Microsoft spent US$7.2 billion on R&D.

Via ZDNet US