Microsoft Corp posted quarterly revenue and earnings on Thursday that easily topped analysts’ forecasts, marking a healthy start to a companywide overhaul it announced in July that should help the software giant transform into a devices and services company.
“Our devices and services transformation is progressing,” Microsoft chief executive Steve Ballmer said in a statement with the company’s fiscal first-quarter results.
Ballmer said in August he would step down within 12 months and the search is on to find his successor.
Microsoft’s net income in the three months through Sept. 30 grew 17 percent to US$5.24 billion, or US$0.62 per share, from US$4.47 billion, or US$0.53 per share, a year ago. That beat the US$0.54 expected by analysts polled by FactSet.
Revenue rose 16 percent to US$18.53 billion, also beating the US$17.79 billion analysts were expecting.
Microsoft’s revenue from its Surface tablets hit US$400 million, representing a gain in revenue and more than a doubling of unit sales from the quarter that ended in June, helped by a price cut to its slimmed down Surface RT model in July. Profitability in the division that houses Surface fell, mainly because the cost of making Surface tablets rose by US$645 million from a year ago.
It was the first time the company has broken out Surface results.
Microsoft investor relations director Lisa Nelson said the strategy behind Surface is to sell more devices, allowing the company to cover its fixed costs, while benefiting if users pay for other Microsoft services like the Skype Internet calling app or extra cloud storage space through SkyDrive.
A new partnership to outfit Best Buy stores with special displays dedicated to Microsoft wares should help boost sales, she said. Revenue from its flagship Windows operating system from manufacturing partners declined, while enterprise software business grew.
Commercial licensing is now by far Microsoft’s biggest reporting segment. Its revenue rose 7 percent to US$9.59 billion, while devices and consumer licensing revenue fell 7 percent to US$4.34 billion.