Follow us:

Microsoft Pri0

Welcome to Microsoft Pri0: That's Microspeak for top priority, and that's the news and observations you'll find here from Seattle Times technology reporter Matt Day.

April 19, 2012 at 1:35 PM

Update: Microsoft exceeds analysts’ estimates with $17.41 billion 3Q revenue

Bolstered yet again by its corporate customers, Microsoft exceeded analysts’ estimates for the third quarter of its fiscal year, posting $17.41 billion in revenue, a 6 percent increase year-over-year.

The company, which reported its results Thursday, posted $5.11 billion in profit, down from $5.23 billion a year ago.

Earnings per share reached 60 cents, exceeding the Zacks consensus analysts’ estimate of 57 cents. Earnings per share were 61 cents in the year-ago quarter.

The Zacks consensus estimate for quarterly revenue was $17.1 billion.

And that’s all ahead of some big launches expected later this year: Windows 8, Office 15, Windows Phone 8.

“We’re super pleased,” said Lisa Nelson, Microsoft’s director of investor relations, who added that operating income grew 12 percent as a result of revenue growth and cost-cutting.

Earnings per share were lower than they were a year ago, Nelson said, because last year, the company had a one-time $460 million (or 5 cents per share) influx, related to a partial settlement with the Internal Revenue Service. Excluding that, earnings per share were actually up 7 percent year over year, Nelson said.

Likewise, excluding the one-time $460 million settlement last year, this year’s quarterly profit saw a $340 million improvement over last year’s.

Here’s how Microsoft’s divisions did:

  • The Windows and Windows Live division’s revenue went up 4 percent to $4.62 billion, helped by big companies buying both PCs and Windows 7.

    Sales of business PCs grew 8 percent, and 40 percent of enterprise desktop PCs are now on Windows 7, Nelson said.

    Microsoft also benefited from a PC market that didn’t do as badly as some analysts had predicted. Research firm Gartner said this month that PC shipments grew 1.9 percent in the first quarter of 2012, exceeding its earlier projection of a 1.2 percent decline. Research firm IDC said PC sales were up 2.3 percent for the quarter, exceeding its earlier forecast of a 0.9 percent decline.

  • The Business division (includes Office, Lync, SharePoint, Exchange, Dynamics) reported revenue of $5.81 billion, a 9 percent year-over-year growth.
  • Nelson did not share updated figures for the sales of Office 2010 (the company had said several months ago that 200 million Office 2010 licenses have been sold), but said it continues to surpass expectation seven quarters after its launch. She also declined to share numbers on Office 365 but said there was “lots of momentum there.”

  • Server and Tools reported revenue of $4.57 billion, a 14 percent increase – its eighth consecutive quarter of double-digit revenue growth.
  • Nelson said the division showed strength across its portfolio, but singled out SQL Server, with a double-digit growth that she declined to put a number to, and Systems Center, with 20 percent growth.

  • Entertainment and Devices (which includes Xbox and Windows Phone), however, was a sore spot, with a drop of 16 percent to revenue of $1.62 billion.
  • Nelson attributed that to the softness of the gaming console market as a whole. There was good sales momentum in October and November but that started to slow in December, she said.

    1.4 million Xbox consoles were sold in the third quarter, compared to 2.7 million in the same quarter a year ago.

    Still, the Xbox remained the country’s top-selling gaming console for the 15th consecutive month.

    No numbers were given for Windows Phone sales.

  • Though the Online Services division (which includes Bing and MSN) continues to lose money, it posted revenue of $707 million, a 6 percent increase. And it cut its losses by $300 million, which Nelson said resulted from increased monetization and cost cutting.

Microsoft shares closed Thursday at $31.01, down 13 cents. In after-hours trading it was up 2.87 percent, to $31.90.

From earlier:

Microsoft exceeded analysts’ estimates for the third quarter of its fiscal year, posting $17.41 billion in revenue, a 6 percent increase year-over-year.

The company, which reported its results Thursday, posted $5.11 billion in profit, down from $5.23 billion a year ago.

Earnings per share reached 60 cents, exceeding consensus analysts’ estimates of 57 cents, according to Zacks. (Yahoo Financial listed a consensus estimate of 58 cents.)

The earnings per share was 61 cents in the year-ago quarter.

The Zacks Consensus Estimate for quarterly revenue was $17.1 billion.

Microsoft appeared to have benefitted from a PC market that didn’t do as badly as some analysts had earlier predicted it would. Research firm Gartner said this month that PC shipments grew 1.9 percent in the first quarter of 2012, exceeding its earlier projection of a 1.2 percent decline. Research firm IDC said PC sales were up 2.3 percent for the quarter, exceeding its earlier forecast of a 0.9 percent decline.

Here’s how Microsoft’s divisions did:

  • Windows and Windows Live: Revenue of $4.62 billion, a 4 percent increase from the prior-year period.
  • Business Division (includes Office, Lync, SharePoint, Exchange, Dynamics): Revenue of $5.81 billion, a 9 percent increase.
  • Server & Tools: Revenue of $4.57 billion, a 14 percent increase.
  • Entertainment & Devices: Revenue of $1.62 billion, a decrease of 16 percent.
  • Online Services: Revenue of $707 million, a 6 percent increase, with operating loss improvement of about $300 million.

Microsoft shares closed Thursday at $31.01, down 13 cents. In after-hours trading it was up 2.68 percent percent, to $31.84.

Comments

COMMENTS

No personal attacks or insults, no hate speech, no profanity. Please keep the conversation civil and help us moderate this thread by reporting any abuse. See our Commenting FAQ.



The opinions expressed in reader comments are those of the author only, and do not reflect the opinions of The Seattle Times.


The Seattle Times

The door is closed, but it's not locked.

Take a minute to subscribe and continue to enjoy The Seattle Times for as little as 99 cents a week.

Subscription options ►

Already a subscriber?

We've got good news for you. Unlimited seattletimes.com content access is included with most subscriptions.

Subscriber login ►
The Seattle Times

To keep reading, you need a subscription upgrade.

We hope you have enjoyed your complimentary access. For unlimited seattletimes.com access, please upgrade your digital subscription.

Call customer service at 1.800.542.0820 for assistance with your upgrade or questions about your subscriber status.

The Seattle Times

To keep reading, you need a subscription.

We hope you have enjoyed your complimentary access. Subscribe now for unlimited access!

Subscription options ►

Already a subscriber?

We've got good news for you. Unlimited seattletimes.com content access is included with most subscriptions.

Activate Subscriber Account ►