Microsoft sales go higher than expected in last quarter

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Friday, January 26, 2007

The sales of the Microsoft Corporation has increased considerably during the latest quarter, having brought more profit than predicted by Wall Street. However, the delay in arrival of the major new products resulted in spoiled financial results.

The quarter that finished in December marked the increase by 6 percent in the Microsoft sales, having reached the revenue of $12.5 billion. The delayed products - the latest versions of Windows Vista and Office 2007 - are to be launched next week.

Microsoft's video game business grew considerably in the quarter - its revenue increased by 75 percent, to the mark of $2.96 billion. The success of the business is explained by steady sales of its Xbox 360 console and highly demanded games like the critically acclaimed Gears of War at the end of 2006.

The noteworthy results have been gained by Microsoft in selling its server software applied in corporate data centers. It brought the revenue up 17 percent, to $2.85 billion. As for the operating profit, it increased by 35 percent, to over $1 billion. Following the most profitable Windows and Office, the server group, including databases, operating systems, and back-end programs used for e-mail systems, presently represents the third major product line of the Corporation.

Net income witnessed 28 percent decrease, to $2.63 billion to be compared to $3.65 billion dollars during the same period of time the previous year. To solve the problem of the product delay and support the personal computer industry, Microsoft provided free or discount coupons for upgraded versions of Windows Vista and Office 2007. Consequently, PC makers sold new computers during the last period of 2006 promising their customers that they would be able to acquire the new Microsoft products, thus preventing PC sales from standing at still point.

The coupon program was initiated by Microsoft in October with expectations of approximately 1.5 billion dollars in revenue to be deferred. However, with better PC sales Microsoft received the $1.64 billion. Microsoft pays attention towards development of the consumer electronics business. In the end of 2006 the company launched a digital media player called Zune, a product to compete with iPod produced by Apple. However, Microsoft's section of consumer entertainment and devices is not profitable yet.

As for Microsoft’s on-line business, it also leaves much to be desired, especially considering Internet searches. In the latest quarter there was a decline in the Microsoft's market share in searching. Still, the company continues to invest into this business segment. The revenue brought by on-line services, including web advertising and search-linked ads, increased by 5 percent in the quarter, to $624 million.

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Sources

"Microsoft's Results of its Last Quarter" — Yepeoo.com, January 26, 2007
Steve Lohr. "Delays Limit Robust Sales at Microsoft" — NYtimes, January 26, 2007

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