Microsoft has exceeded expectations of many analysts with a better result than most analysts anticipated. The results seemed to be boosted by an unexpected rise in the sale of Windows 7 for Personal Computers. However, profits weren’t at their best, mainly attributed to unexpected below-par performance of the Entertainment and Devices division, which is responsible for the Xbox and also software that powers the company’s Windows Phone platform. Revenues hit a record high at $17.4 billion which is a 6% rise relative to last year. Profits fell to $5.1 billion down from last year’s figure to $5.2 billion. As mentioned before, the surprising loss in the E&D division contributed to this decline. Analysts predicted revenues of $17.2 billion at a profit of $4.93 billion.
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The stock is performing very well with a 20% rise compared to last year. Despite this growth, investors are still wary of whether Microsoft will be able to compete against Google and Apple’s ever increasing market share. Apple is well ahead of Microsoft in terms of market share and its revenue from the iPhone brand exceeds Microsoft’s overall figure by a hefty margin.
The Bing search engine which powers Yahoo continues to be a loss maker for the company. Revenues in the Online division lost $479 million in comparison to last quarter’s figure of $458 million. The prime profit makers of the company are its Windows operating system and its Office package which contribute 105% of the company’s overall profits, pulled down by other divisions. In particular, Windows revenues rose by almost 4% to $4.6 billion. This rise has come at a time when PC sales have been abysmal.
Analysts have asserted that Windows has been a positive surprise. Josh Olson, analyst at Edward Jones said that Microsoft had made most profit selling licences for its current operating system, Windows 7. Microsoft Office also contributed to a majority of the company’s profits. Office continues to rely on upgrades from corporate enterprises. Both Windows and Office have delivered strong results, which have compensated losses incurred in other divisions.
The current quarter’s bright spot was clearly the company’s operating system, especially after Microsoft had to compete against the likes of Apple’s rising iPad sales. The company was surprisingly silent on its Windows Phone software. Microsoft has partnered with Nokia in manufacturing smartphones based on the Windows Phone platform and has offered a sum of $250 million to Nokia to aid research and promote the platform.
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