Microsoft Corp produced a surprisingly strong quarter to start the year, pleasing investors looking forward to even bigger things from the software maker’s much-anticipated overhaul of Windows operating system next fall.
The results announcement on Thursday defied the conventional thinking that Microsoft would have trouble selling more Windows licenses as more people snapped up tablet computers, such as Apple Inc’s trendsetting iPad, while other prospective PC buyers delayed making their purchases until the next version of Microsoft’s operating system hits the market.
That didn’t turn out to be the case during the three months ending in March as revenue at Microsoft’s Windows division edged up 4 percent from last year to US$4.6 billion. Microsoft attributed the gain to an uptick in businesses who bought licenses for Windows 7. It marked only the second time in the past six quarters that Microsoft has registered a year-on-year gain in the Windows division.
“We’re driving toward exciting launches across the entire company, while delivering strong financial results,” Microsoft chief executive Steve Ballmer said.
High hopes are riding on the revamped system, Windows 8, because Microsoft designed it to run on devices that can be controlled by touch, as well as keyboards and computer mice.
That means Windows 8 can serve a dual purpose: It could help spur the development of sleeker PCs that spur more sales and also give Microsoft a chance to grab a piece of the rapidly growing tablet computer market.
Although Microsoft hasn’t announced a target date yet, most analysts believe Windows 8 will go on sale in September or October.
Microsoft earned US$5.1 billion, or US$0.60 per share, during the fiscal third quarter period. That was a 2 percent decline from net income of US$5.2 billion, or US$0.61 per share, a year ago.
Last year’s results were boosted by a tax benefit of US$461 million, or US$0.05 per share.
Revenue rose 6 percent from last year to US$17.4 billion.
While the Windows division held up better than expected, one of Microsoft’s recent strongholds weakened. The deterioration occurred in the entertainment division as Microsoft’s shipments of its Xbox 360 video game console plunged nearly 50 percent to 1.4 million units.
The sagging demand occurred as more people are playing games on phones and tablet computers. Revenue in the entertainment division declined 16 percent from last year to US$1.6 billion.
Microsoft’s long-suffering online division, which has struggled for years to compete against Internet search leader Google Inc, managed to narrow its losses in the quarter ending March.
The division, which includes its Bing search engine, posted an operating loss of US$479 million compared with a loss of US$776 million at the same time last year. Microsoft’s online revenue totaled US$707 million, a 6 percent increase. By comparison, Google’s revenue during the same period surged 24 percent.