Microsoft earnings again buoyed by Windows 7

Microsoft said its new OS has been installed on 10 percent of the world's PCs

Windows 7 has once again kept Microsoft's balance sheet healthy. On Thursday, the company announced strong income and revenue growth for its third fiscal quarter, thanks in part to continued brisk sales of the new OS.

For the quarter ended March 31, Microsoft reported net income of US$4.01 billion, up 35 percent from the same period a year prior. Third-quarter revenue was $14.5 billion, a jump of 6 percent. Earnings came in at $0.45 per share, beating analysts' expectations by $0.03 per share, according to a poll by Thomson Reuters.

As in the previous quarter, Windows 7 provided much of the boost needed to achieve the positive numbers, Microsoft Chief Financial Officer Peter Klein said in a statement. He also pointed to the company's Bing search, Xbox Live and emerging cloud services as areas of growth.

Overall revenue from Windows sales was up 28 percent compared to the same period a year earlier. Microsoft took the opportunity to note that 10 percent of PCs worldwide are now running Windows 7.

The Windows & Windows Live Division pulled in $4.41 billion in revenue for the quarter, up sharply from $3.45 billion a year earlier. Other divisions reported more modest gains: The Server and Tools group pulled in $3.57 billion, up from $3.49 billion last year; Entertainment and Devices was up slightly at $1.66 billion, from $1.63 billion a year earlier; and Online brought in $566 million, up from $507 million.

Only the Business Division did not report a gain, reporting revenue of $4.24 billion, down from $4.5 billion a year earlier.

The quarterly results factor in $305 million of deferral of revenue related to the Microsoft Office 2010 Technology Guarantee program, which promises Office 2007 customers free upgrades to Office 2010 when that software is released.

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Joab Jackson

IDG News Service
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