Microsoft quarter rescued by Microsoft Office

Xbox and enterprise software saved Microsoft from sluggish PC sales in its third fiscal quarter

Microsoft enjoyed strong income and revenue growth for its third fiscal quarter despite sluggish PC sales, with Xbox and Office doing well, the company reported Thursday.

For the quarter that ended March 31, Microsoft reported net income of $US5.23 billion, up 31 per cent from the same period last year. Third-quarter revenue was $16.43 billion, a jump of 13 per cent. Diluted earnings came in at $0.61 per share, up 36 per cent.

"We delivered strong financial results despite a mixed PC environment, which demonstrates the strength and breadth of our businesses," Microsoft Chief Financial Officer Peter Klein said in a statement.

Overall, Windows 7 revenue shrank by approximately four per cent when compared to the same time last year, from $4.6 billion to $4.4 billion. The company attributed this slackening of demand to sluggish PC sales.

Other business units made up the difference, however. Buoyed by strong Microsoft Office sales, the Microsoft business division generated more revenue than the Windows unit this quarter. It generated $5.2 billion, a jump of 21 per cent from last year's $4.3 billion.

Entertainment and devices division revenue grew by 60 per cent, coming in at $1.9 billion this quarter, up from $1.2 billion a year ago, owing to strong sales of the Xbox, the Xbox live service and the Xbox Kinect controller.

Server and tools division revenue grew by 11 per cent, to $4.1 billion from last year's $3.7 billion, thanks to continued demand for Windows Server 2008 R2, SQL Server 2008 R2 and other products and services.

Shareholders are receiving a bonus this year of $0.05 per share, thanks to an audit settlement with the U.S. Internal Revenue Service that covered the tax years 2004 to 2006.

Joab Jackson covers enterprise software and general technology breaking news for The IDG News Service. Follow Joab on Twitter at @Joab_Jackson. Joab's e-mail address is Joab_Jackson@idg.com

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