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Microsoft Sees Growth on Server and Tools as Xbox Division Drops In Revenue

Radford C. Apr 20, 2012 0

Microsoft-Earnings-Graph-1Q-2012

Microsoft announced quarterly revenue of $17.41 billion for the quarter ended Mar. 31, 2012, a 6 percent increase from the prior year period. Net income for the quarter was $5.11 billion compared with $5.23 billion in the prior year period and part of the drop was attributed to the overall slowdown of the gaming economy.

“We’re driving toward exciting launches across the entire company, while delivering strong financial results,” said Steve Ballmer, Microsoft’s CEO, in a statement. “With the upcoming release of new Windows 8 PCs and tablets, the next version of Office, and a wide array of products and services for the enterprise and consumers, we will be delivering exceptional value to all our customers in the year ahead.”

Allan Krans, an analyst with Technology Business Research (TBR), chimed in on the software giant’s fiscal Q3 2012 earnings:

“Microsoft started 2012 the way it ended 2011, with Server and Tools and Business Division businesses accelerating, and Windows Division recording another quarter of incremental revenue growth from a year ago. Average PC shipment declines through the latter half of 2011 and beginning of 2012, coupled with Windows 7 peaking in deployments continue to hinder consistent performance from the Windows business. Microsoft’s Servers and Tools and Business Divisions recorded the highest yearly growth during the quarter, at 14.1 percent and 9.1 percent respectively. Business, Windows and Server and Tools Divisions were once again the largest contributors to Microsoft’s $17.4 billion in revenue during 1Q12. Microsoft’s ability to refresh core products to cater to customer needs in cloud and flexible IT will determine the growth trajectory for these core businesses moving forward.”

“We saw strong demand for our business desktop and infrastructure offerings,” said Peter Klein, chief financial officer at Microsoft, in a statement. “Solid revenue growth and continued cost discipline drove double-digit operating income growth.”

On a call with analysts, Klein added, “On the infrastructure side, the Server & Tools Business delivered double-digit revenue growth, with SQL Server leading the way. We’ve now launched System Center 2012 and SQL Server 2012, and the new versions of Windows Server and Visual Studio are on the horizon. Our product roadmap and vision are driving new customer wins and strong Enterprise Agreement renewals. We are confident that we are uniquely positioned to address the needs of CIOs as they strive to efficiently manage private and public clouds.”

However, Microsoft’s Entertainment & Devices Division posted revenue of $1.62 billion, a decrease of 16 percent from the prior period due to a soft gaming console market. Despite the drop, Xbox remained the top-selling console in the U.S. for the 15th consecutive month, and the company announced new television content partners and experiences for its 40 million Xbox LIVE members.

“In gaming and entertainment, while industry console sales were softer than our expectations, we continue to maintain our shared leadership position,” Klein told analysts. “With Xbox LIVE, we are adding more content and partners as we expand the entertainment experience and build on our leading position in the living room.”

Via »CNNMoney