Microsoft benefits big from PC sales

By Jessica Mintz Associated Press

SEATTLE — Microsoft Corp. said Thursday its earnings in the most recent quarter jumped 60 percent, as a rebound in the personal computer industry drove sales of the company’s latest Windows operating system.

But Microsoft said the division that makes Office software and other business programs, the company’s other cash cow, saw revenue slip 3 percent, while revenue from its typically fast-growing server software group edged up just 2 percent.

PC shipments bounced back during the holiday shopping season after one of its roughest years to date, but analysts attributed nearly all the gains to consumers drawn to inexpensive laptops and their smaller, less powerful cousin, the netbook.

Microsoft said it saw no signs yet that big corporations had resumed spending on technology. The company said that dragged down those divisions.

For the fiscal second quarter, which ended Dec. 31, Microsoft said its net income rose to $6.7 billion, or 74 cents per share, from $4.17 billion, or 47 cents per share, in the same period last year.

The latest version of Windows, called Windows 7, was released in October, but in the months before the launch Microsoft gave new PC buyers the right to upgrade to Windows 7 later. The second-quarter results included $1.7 billion in deferred revenue for Windows sales made during earlier quarters but not recorded until the launch.

That added 14 cents to the software maker’s net income. Excluding the gain, Microsoft said it earned 60 cents per share in the quarter, one cent more than analysts polled by Thomson Reuters were expecting.

Revenue increased 14 percent to $19 billion from $16.6 billion in the year-ago quarter.

Excluding the deferred Windows revenue, the total was $17.3 billion, slightly less than the $17.8 billion Wall Street was expecting.

In the Windows division, revenue leapt 70 percent and net income nearly doubled to $5.4 billion.

Microsoft is expected to release a new version of Office this year, which could account for the lack of growth in the company’s business software division. The company also faces increasing competition from Google Inc.’s Web-based word processing, spreadsheet and other software.

Shares of Microsoft, which is based in Redmond, rose 26 cents to $29.42 in extended trading Thursday after the release of results.