Microsoft Q3 revenue grows almost across the board, beats Wall Street expectations

However, profits dipped slightly in the quarter

Microsoft revenue grew across most of its businesses in the third quarter, with the exception of its entertainment division, but profit fell slightly, according to the company.

Overall, revenue grew 6 per cent to $US17.41 billion in the quarter ended March 31, but net income dropped to $US5.11 billion, or $US0.60 per share, from $US5.23 billion, or $US0.61 per share, year-on-year.

Microsoft noted that the 2011 third-quarter profit was helped by a one-time tax benefit of $US461 million, or $US0.05 per share, related to a tax settlement with the US government.

Microsoft exceed the consensus expectation of financial analysts polled by Thomson Financial of $US0.58 earnings per share and $US17.18 billion in revenue.

Microsoft CEO Steve Ballmer called the results "strong" in a statement and highlighted the intense upgrade cycle the company is in the midst of, including upcoming major new releases of key consumer and enterprise products like Windows and Office.

Many industry experts see the next 12 to 18 months as a crucial period for Microsoft, which finds itself scrambling to ride the wave of cloud computing, a threat to its historical business model, based on on-premise desktop and server software.

Microsoft officials have said repeatedly their strategy of offering enterprise customers hybrid options for cloud and on-premise software deployments is the right one, and yielding expected results. However, Microsoft faces intense pressure from many quarters, including from Google's Apps suite, which competes directly with Exchange and Office.

As such, much is riding on the success of upcoming Microsoft products like the Windows 8 family of OSes for desktop and laptop PCs, tablets and, possibly, smartphones, and the Office 15 revamping of the Office productivity desktop and server-side applications like Word, Excel, SharePoint and Exchange.

In the third quarter, the Server and Tools Division, which includes products like the company's enterprise database SQL Server, posted revenue of $US4.57 billion, up 14 per cent, thanks in part to strong SQL Server and System Center sales.

The Microsoft Business Division grew its revenue 9 percent to $US5.81 billion, helped by continued success of Office 2010 among both consumers and businesses, and of the Dynamics enterprise software family.

The Windows and Windows Live Division, whose revenue fell in the second quarter, rebounded with a 4 per cent increase to $US4.62 billion, thanks to "strong" sales of Windows 7, especially among enterprises.

The Online Services Division, which includes online advertising generated by products like the Bing search engine, had revenue of $US707 million, up 6 percent.

However, revenue at the Entertainment and Devices Division, which makes the Xbox, fell 16 per cent to $US1.62 billion, a drop Microsoft attributed to what it called "a soft gaming console market."

Juan Carlos Perez covers enterprise communication/collaboration suites, operating systems, browsers and general technology breaking news for The IDG News Service. Follow Juan on Twitter at @JuanCPerezIDG.

Join the newsletter!

Error: Please check your email address.
Rocket to Success - Your 10 Tips for Smarter ERP System Selection
Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Juan Carlos Perez

IDG News Service
Show Comments

Cool Tech

Breitling Superocean Heritage Chronographe 44

Learn more >

SanDisk MicroSDXC™ for Nintendo® Switch™

Learn more >

Toys for Boys

Family Friendly

Panasonic 4K UHD Blu-Ray Player and Full HD Recorder with Netflix - UBT1GL-K

Learn more >

Stocking Stuffer

Razer DeathAdder Expert Ergonomic Gaming Mouse

Learn more >

Christmas Gift Guide

Click for more ›

Most Popular Reviews

Latest Articles

Resources

PCW Evaluation Team

Edwina Hargreaves

WD My Cloud Home

I would recommend this device for families and small businesses who want one safe place to store all their important digital content and a way to easily share it with friends, family, business partners, or customers.

Walid Mikhael

Brother QL-820NWB Professional Label Printer

It’s easy to set up, it’s compact and quiet when printing and to top if off, the print quality is excellent. This is hands down the best printer I’ve used for printing labels.

Ben Ramsden

Sharp PN-40TC1 Huddle Board

Brainstorming, innovation, problem solving, and negotiation have all become much more productive and valuable if people can easily collaborate in real time with minimal friction.

Sarah Ieroianni

Brother QL-820NWB Professional Label Printer

The print quality also does not disappoint, it’s clear, bold, doesn’t smudge and the text is perfectly sized.

Ratchada Dunn

Sharp PN-40TC1 Huddle Board

The Huddle Board’s built in program; Sharp Touch Viewing software allows us to easily manipulate and edit our documents (jpegs and PDFs) all at the same time on the dashboard.

George Khoury

Sharp PN-40TC1 Huddle Board

The biggest perks for me would be that it comes with easy to use and comprehensive programs that make the collaboration process a whole lot more intuitive and organic

Featured Content

Product Launch Showcase

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?