Microsoft earnings top expectations

SEATTLE — A swell of spending by businesses on new computers, software and servers helped push Microsoft Corp.’s earnings for the most recent quarter past Wall Street’s expectations.

Business spending on technology slowed to a trickle during the economic downturn. Microsoft’s report, released after the market closed Thursday, is the most recent evidence that corporate spending is back in full swing.

Microsoft said the increase in sales to businesses of the newest versions of its Windows operating system, Office programs and server software made up for softer-than-expected revenue from sales of consumer PCs in the quarter.

“We ended up in this great sweet spot in business spending that was re-emerging after the downturn,” Microsoft’s general manager of investor relations, Bill Koefoed, said in an interview. The pickup “aligned just perfectly with our product launches.”

Koefoed said he expects the spending to continue for some time, noting that companies are using more than 400 million PCs that are more than four years old.

For the fiscal first quarter, which ended in September, Microsoft’s net income rose 51 percent to $5.4 billion, or 62 cents per share, from $3.6 million, or 40 cents per share, in the same period last year.

In last year’s quarter, Microsoft deferred some revenue from Windows sales. Had it not done so, net income would have been only 16 percent higher this year in comparison.

Revenue increased 25 percent to $16.2 billion, from $12.9 billion a year ago.

Microsoft beat Wall Street’s expectations on both counts. Analysts surveyed by Thomson Reuters had forecast net income of 55 cents per share on $15.8 billion in revenue.

The Windows division’s revenue rose 66 percent to $4.8 billion. Office and other business software brought in $5.1 billion, a 14 percent jump. The group that makes server software reported a 12 percent increase in revenue to $4 billion.

Microsoft’s online revenue, which comes primarily from search advertising, edged up 8 percent to $527 million. That segment widened its operating loss in the quarter to $560 million, however, as the company continued to spend money on chasing Google Inc., the No. 1 search provider.

The software maker’s results tracked with those from other technology heavyweights. The two main chip-makers, Intel Corp. and Advanced Micro Devices Inc., have been milking stronger sales to corporations to make up for weakness in consumer demand for PCs.

Microsoft’s other consumer products should be more prominent factors in the holiday quarter. The company will soon start selling Kinect, an add-on for the Xbox 360 game console that can read body movements so players don’t need to hold a controller.

The company recently launched a new smart phone.

Shares of Microsoft, which is based on Redmond, rose 85 cents, or 3.2 percent, to $27.13 in extended trading after the release of results. Earlier, the stock added 23 cents to close at $26.28.

More in Herald Business Journal

Aerospace workers adjust to changing industry

The number of Boeing workers dropped almost 10 percent since last year.

Tom Hoban
Are millennials warming up to life in suburbia?

They dominate the apartment market and their wants need to be accounted for, says columnist Tom Hoban.

Camano artist mixes flask, paintings for successful cocktail

Art flasks prove popular as bachelorette gifts, birthday presents and wedding favors.

Fluke’s T6 Electrical Testers receives Innovation Awards honor

Fluke’s T6 Electrical Testers have received top honors in the Tools and… Continue reading

Everett volunteer named ‘community champion’ by Molina Healthcare

Everett’s Jorge Galindo was one of seven people across the state to… Continue reading

Cascade Valley Health to hold Festival of Trees in Arlington

Cascade Valley Health Foundation will be holding their fifth annual Festival of… Continue reading

7-Eleven program helped add 500 trees, shrubs to Everett park

Last month, 7-Eleven helped plant more than 500 trees and shrubs at… Continue reading

Pentagon inspector general praises secret $80 billion bomber

US Government Accountability Office in 2016 rejected a protest filed by Boeing-Lockheed Martin.

Everett’s Sentry Credit celebrates a quarter century in business

Sentry Credit Inc. in Everett is celebrating its 25th year in business.… Continue reading

Most Read