Spurred on by Windows 7, Microsoft reported record revenue for the fourth calendar quarter of 2009. But a number of Microsoft's businesses also saw revenue decline from a year ago.
For Microsoft's second fiscal quarter ended Dec. 31, Microsoft reported record net income of $6.66 billion on revenue of $19.02 billion. Net income soared 60 percent from a year ago, while revenue increased a more modest 18 percent.
Like Apple, Microsoft's revenue benefited from new accounting principles that allowed it to recognize deferred revenue, in this case $1.71 billion of deferred revenue relating to the Windows 7 Upgrade Option Program and pre-sales of Windows 7 to OEMs and retailers before general availability.
"Exceptional demand for Windows 7 led to the positive top-line growth for the company," said Peter Klein, chief financial officer at Microsoft, in a statement. "Our continuing commitment to managing costs allowed us to drive earnings performance ahead of the revenue growth."
Microsoft's Windows 7 operating system launched on Oct. 22, and Microsoft said that it had sold over 60 million licenses to the operating system worldwide, making it the fastest selling operating system in history.
However, Klein and other company executives aid that they have not seen return to enterprise spending growth, and expect to see it return gradually over the course of the year, Klein said.
Microsoft's Windows and Windows Live division racked up $6.904 billion in revenue, an increase of about a third from the $4.06 billion the division recorded for the same period last year. OEM revenue climbed 21 percent, faster than PC shipments for the first time in eight quarters. In all, Microsoft saw a higher mix of consumer PCs than business PCs, executives said, and 90 percent of netbooks now use Windows - over half with Windows 7.
Microsoft's Server and Tools Division climbed slightly from $3.755 billion to $3.844 billion. The company will release SQL Server 2008 R2 in May.
"Obviously, the biggest driver to ASPs will be the business PC refresh and the growth of that and the timing of that remains uncertain," Klein said. "We do maintain our general view, that we have, that this will occur over this year, and occur gradually over the next couple of years." He also cited the upsell to Windows 7 Home Premium on netbooks.
However, Microsoft's remaining businesses all saw revenue fall. Microsoft's Entertainment Division, which includes its Xbox business, saw revenue fall from $3.256 billion to $2.902 billion. Microsoft said it sold 13 percent fewer Xbox consoles compared to a year ago, or about 5.2 million units.
Microsoft's other cash cow, its Business Division, also saw a slight drop from $4.881 billion to $4.745 billion. Microsoft will ship Office 2010 at the end of its fiscal year, in June, although most revenue won't be recognized until the next fiscal year, Klein said.
Microsoft's online business also saw a decrease, from $609 million to $581 million. But the company also said it has seen its Bing search engine's market share climb steadily, quarter after quarter.
Microsoft didn't break out the net income for each of its groups; most reported a positive operating income. Microsoft's Windows business reported $5.394 billion in operating income, versus $2.712 billion a year ago, and the Server and Tools business reported $1.491 billion versus $1.375 billion. The Business Division showed a slight dip, reporting $3.010 billion versus $3.021 billion a year ago.
Microsoft's Entertainment and Devices business recorded just $375 million in operating income, but showed a sizable increase compared to just $175 million in operating profit a year ago. Microsoft's online business lost even more money than it did in 2008, with an operating loss of $466 million versus a loss of $320 million.
Microsoft expects its Windows division to be in line with the PC market for fiscal 2010, with its business division lagging PC shipments. Its online and entertainment devices business should be flat or in line with the market, while its server business will grow "slightly faster than server shipments," the company said.
For Microsoft's second fiscal quarter ended Dec. 31, Microsoft reported record net income of $6.66 billion on revenue of $19.02 billion. Net income soared 60 percent from a year ago, while revenue increased a more modest 18 percent.
Like Apple, Microsoft's revenue benefited from new accounting principles that allowed it to recognize deferred revenue, in this case $1.71 billion of deferred revenue relating to the Windows 7 Upgrade Option Program and pre-sales of Windows 7 to OEMs and retailers before general availability.
"Exceptional demand for Windows 7 led to the positive top-line growth for the company," said Peter Klein, chief financial officer at Microsoft, in a statement. "Our continuing commitment to managing costs allowed us to drive earnings performance ahead of the revenue growth."
Microsoft's Windows 7 operating system launched on Oct. 22, and Microsoft said that it had sold over 60 million licenses to the operating system worldwide, making it the fastest selling operating system in history.
However, Klein and other company executives aid that they have not seen return to enterprise spending growth, and expect to see it return gradually over the course of the year, Klein said.
Microsoft's Windows and Windows Live division racked up $6.904 billion in revenue, an increase of about a third from the $4.06 billion the division recorded for the same period last year. OEM revenue climbed 21 percent, faster than PC shipments for the first time in eight quarters. In all, Microsoft saw a higher mix of consumer PCs than business PCs, executives said, and 90 percent of netbooks now use Windows - over half with Windows 7.
Microsoft's Server and Tools Division climbed slightly from $3.755 billion to $3.844 billion. The company will release SQL Server 2008 R2 in May.
"Obviously, the biggest driver to ASPs will be the business PC refresh and the growth of that and the timing of that remains uncertain," Klein said. "We do maintain our general view, that we have, that this will occur over this year, and occur gradually over the next couple of years." He also cited the upsell to Windows 7 Home Premium on netbooks.
However, Microsoft's remaining businesses all saw revenue fall. Microsoft's Entertainment Division, which includes its Xbox business, saw revenue fall from $3.256 billion to $2.902 billion. Microsoft said it sold 13 percent fewer Xbox consoles compared to a year ago, or about 5.2 million units.
Microsoft's other cash cow, its Business Division, also saw a slight drop from $4.881 billion to $4.745 billion. Microsoft will ship Office 2010 at the end of its fiscal year, in June, although most revenue won't be recognized until the next fiscal year, Klein said.
Microsoft's online business also saw a decrease, from $609 million to $581 million. But the company also said it has seen its Bing search engine's market share climb steadily, quarter after quarter.
Microsoft didn't break out the net income for each of its groups; most reported a positive operating income. Microsoft's Windows business reported $5.394 billion in operating income, versus $2.712 billion a year ago, and the Server and Tools business reported $1.491 billion versus $1.375 billion. The Business Division showed a slight dip, reporting $3.010 billion versus $3.021 billion a year ago.
Microsoft's Entertainment and Devices business recorded just $375 million in operating income, but showed a sizable increase compared to just $175 million in operating profit a year ago. Microsoft's online business lost even more money than it did in 2008, with an operating loss of $466 million versus a loss of $320 million.
Microsoft expects its Windows division to be in line with the PC market for fiscal 2010, with its business division lagging PC shipments. Its online and entertainment devices business should be flat or in line with the market, while its server business will grow "slightly faster than server shipments," the company said.
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