Microsoft grows revenue, improves profits in Q2

Revenue from Surface tablet sales more than doubled sequentially from the first quarter

Microsoft reported record revenue for Q2 2014.

Microsoft reported record revenue for Q2 2014.

A big jump in sales in Microsoft's consumer hardware devices unit, which includes its Xbox gaming console and Surface tablets, helped the company grow its revenue 14 percent and slightly improve profits year-on-year in its second fiscal quarter.

Microsoft's revenue in the quarter ended December 31 came in at $US24.51 billion, exceeding the consensus expectation of $23.68 billion from Wall Street analysts polled by Thomson Financial.

Net income grew from $US6.38 billion, or $US0.76 per share, in 2012's second fiscal quarter, to $US6.56 billion, or $US0.78 per share, Microsoft said.

The Devices & Consumer Hardware unit grew its revenue from $US2.80 billion to $US4.72 billion, as Microsoft sold 7.4 million Xbox gaming console units into the retail channel, almost 4 million of them the new Xbox One model.

Meanwhile, revenue from Surface tablet sales more than doubled sequentially, from $US400 million in the first quarter to $US893 million in the second quarter.

Devices & Consumer Licensing revenue dropped from $US5.70 billion to $US5.40 billion year-on-year, as sales of Windows to hardware partners that in turn resell it with their PCs, tablets and other devices declined 3 per cent. Windows OEM Pro sales to businesses grew 12 per cent, but Windows OEM sales to consumers erased that gain.

Devices & Consumer Licensing also includes sales of Office to consumers, Windows Phone and intellectual property licensing.

The "Other" category of Devices & Consumer saw its revenue fall as well from $US2 billion to $US1.8 billion. This category includes, in part, sales of online ads in Microsoft's websites and sales of Office 365 Home Premium, the subscription-based version of Office for consumers. Search ads revenue grew 34 per cent.

Overall, the Devices & Consumer revenue grew 13 per cent to $US11.91 billion.

Meanwhile, Commercial revenue grew 10 per cent to $US12.67 billion, helped by strong sales growth of SQL Server, System Center and enterprise cloud computing products, like Office 365, Azure services and Dynamics CRM Online.

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.

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Juan Carlos Perez

IDG News Service
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