Microsoft on Friday capped off a rousing week in which it released Windows 7, snagged a deal with Twitter and released quarterly earnings that easily beat the expectations of Wall Street analysts.
The Redmond, Washington-based software giant said net profit fell 18 percent in the first quarter of its fiscal year to US$3.57 billion, or US$0.40 per share, from US$4.37 billion, or US$0.48 per share, a year ago.
Revenue declined 14 percent in the quarter that ended on Sept. 30 to US$12.92 billion.
PHOTO: REUTERS
It was the third quarter in a row of sliding revenue for the company founded by Bill Gates, but it surpassed analysts’ forecasts of US$12.37 billion.
Microsoft said its first-quarter results would have been even better if it had not deferred US$1.47 billion in revenue related to Windows 7 pre-sales and an upgrade option program.
Taking this adjustment into account, earnings were US$0.52 per share — far better than the US$0.32 expected by analysts.
Microsoft shares surged 5.38 percent in New York to close at US$28.02.
“We are very pleased with our performance this quarter and particularly by the strong consumer demand for Windows,” Microsoft chief financial officer Chris Liddell said in a statement. “We also maintained our cost discipline, which allowed us to drive strong earnings performance despite continued tough overall economic conditions.”
Speaking in a conference call to financial analysts, Liddell attributed the stronger-than-expected results to “consumer demand for our Windows and XBox products combined with excellent cost controls.”
He said that Microsoft’s headcount was 4 percent lower in the quarter than at the same time last year — “the first time a reduction of that significance has been achieved in the company’s history.”
Liddell said business spending had yet to see a broad-based recovery, but there was “potential for a corporate PC refresh cycle beginning in calendar year 2010 although it could be gradual and occur over a couple of years.”
Microsoft said revenue was up slightly in the server division at US$3.43 billion from US$3.42 billion a year ago, while business division revenue fell to US$4.40 billion from US$4.95 billion a year ago.
Revenue from entertainment and devices, which includes Microsoft’s XBox 360 game console and Zune MP3 music player, was flat at US$1.89 billion.
Online services, where Microsoft is battling Google and other Web giants, reported an operating loss of US$480 million, up from US$321 million a year ago, and revenue fell to US$490 million from US$520 million.
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