Microsoft profit tops forecast; shares jump

LOS ANGELES — Microsoft posted quarterly revenue and earnings Thursday that easily topped Wall Street 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.

Its stock rose 6 percent in after-hours trading.

“Our devices and services transformation is progressing,” CEO Steve Ballmer said in a statement with the company’s fiscal first-quarter results. Ballmer said in August he’ll step down within 12 months and the search is on to find his successor.

Microsoft’s net income in the three months to Sept. 30 grew 17 percent to $5.24 billion, or 62 cents per share, from $4.47 billion, or 53 cents per share, a year ago.

That beat the 54 cents expected by analysts polled by FactSet.

Revenue rose 16 percent to $18.53 billion, also beating the $17.79 billion analysts were expecting.

Microsoft’s revenue from its Surface tablets hit $400 million, representing a gain in revenue and unit sales from the quarter that ended in June, though profitability in the division that houses Surface fell. It’s the first time the company has broken out Surface results.

Revenue from its flagship Windows operating system from manufacturing partners declined, while enterprise software business grew.

Commercial licensing — representing enterprise products like Windows Server and System Center — is now by far Microsoft’s biggest reporting segment. Its revenue rose 7 percent to $9.59 billion. Devices and consumer licensing revenue, containing revenue from Windows and Windows Phone, fell 7 percent to $4.34 billion.

It has been a busy year for Redmond, Wash.-based Microsoft Corp. Last month, it vowed to acquire Nokia’s smartphone business for $7.2 billion and this month it launched sales of the latest version of its Surface tablets. Next month it will launch its latest game console, Xbox One.

The transformation of Microsoft’s business is crucial as sales of personal computers — once Windows’ mainstay — continued to fall. Research firm IDC said that global shipments of PCs fell 8 percent in the third quarter of the year for the sixth straight decline. Another firm, Gartner, put the decline at almost 9 percent.

Microsoft’s shares rose $1.93 to $35.65 in extended trading following the release of the earnings report.

More in Herald Business Journal

An Alaska Airlines Embraer 175. The carrier plans to use this model on routes to and from Paine Field in Everett. (Alaska Airlines)
Alaska Airlines says it hopes to be a decent neighbor

Diana Birkett Rakow shared aspects of the company’s philosophy as keynote at an Economic Alliance event.

Safe saves Everett Office Furniture’s future after fire

The business was able to reopen because vital paperwork was preserved.

Get ready for the era of hypersonic flight — at Mach 5

The Pentagon sees hypersonic weaponry as a potential game changer.

Why real estate investors are watching self-driving cars closely

With decisions on real estate made years in advance, could self-driving cars change how we live?

More than 60 Boeing 737s per month: Can suppliers keep up?

There was lots of talk this week about the prudence and pressures of soaring production rates.

Developer proposes an 18-story building in Lynnwood

It would be the second-tallest in the county and include apartments with retail space.

Snohomish County business licenses

PLEASE NOTE: Business license information is obtained monthly from the Washington Secretary… Continue reading

New Everett mayor speaks out about business in city, region

Q&A: Cassie Franklin on what can be done to get Boeing to build the 797 here and attract new industries.

Aerospace analyst explains how he’ll help state’s Boeing bid

Richard Aboulafia will deliver a report on Washington’s strengths and weaknesses in landing the 797.

Most Read