Microsoft results suggest a strengthening market

  • Associated Press
  • Thursday, July 22, 2010 5:39pm
  • Business

SEATTLE — Microsoft Corp. said Thursday that its net income rose 48 percent in the most recent quarter, the latest sign that businesses are again spending money on technology.

Strong sales of Windows, particularly to Microsoft’s corporate customers, helped boost results in the fiscal fourth quarter. Microsoft said it has sold more than 175 million licenses of the newest version, Windows 7, since it went on sale last year.

Big businesses stopped replacing aging computers, servers and software during the worst of the recession. Last quarter, the software maker said it saw signs that its corporate customers were starting to spend again.

This quarter’s results, which follow a strong report from chipmaker Intel Corp., show the trend has continued. Microsoft Chief Financial Officer Peter Klein said billings for its multiyear agreements with big companies increased in the quarter.

Microsoft’s results are closely tied to the personal computer market. Worldwide PC shipments rose about 22 percent in the quarter, according to the research group IDC.

For the April-June period, Microsoft’s net income jumped to $4.52 billion, or 51 cents per share, from $3.05 billion, or 34 cents per share, last year.

Revenue rose 22 percent to $16.04 billion, from $13.1 billion in the same period a year ago.

The results were stronger than Wall Street had expected. Analysts surveyed by Thomson Reuters had forecast net income of 45 cents per share on $15.3 billion in revenue.

Revenue for the group that makes Windows increased 44 percent to $4.5 billion, more than a quarter of Microsoft’s total. The division that makes the recently updated Office 2010 and other business software saw revenue rise 15 percent to $5.3 billion.

Microsoft’s server software group reported a 14 percent increase in revenue to $4 billion.

Revenue also increased in the company’s online search and advertising group and in its entertainment and devices segment, which includes the Xbox 360 video game system, computer games, mobile phone systems and other devices.

But both those groups reported operating losses. Microsoft continued to invest more than it made from its Bing search engine as it worked to get a search advertising partnership with Yahoo Inc. up and running.

The company also wrote down a charge related to the Kin phone, a device for younger smart phone users that Microsoft pulled off the market just two months after it launched.

The company’s massive cash pile was about $3 billion lighter at the end of June than it was three months earlier, at $36.8 billion. The company said it spent $3.8 billion to repurchase stock in the quarter.

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