Microsoft Makes Record-Breaking Money But Keeps Losing Big Online [Microsoft]

The excellent news for Microsoft: a record 16.2 billion dollars of revenue last quarter! The bad news: that’s even with continued big losses in their online segment, and being passed by Apple in revenue.

The bulk of the scoop, though, was positive for Ballmer and friends: Xbox 360 was the leading console over the summer, Office 2010 is selling fast. More important, though, might be what Microsoft has to see forward to. Specifically, the approaching launch of Windows Phone 7, and the portion of the Bing-Yahoo deal where Microsoft actually starts making a living .

Worth noting, also, that Microsoft’s fallen behind Apple inside the revenue race. Although Microsoft’s still winning where it counts, posting $5.41 billion in net income to Apple’s $4.3 billion.

Microsoft Reports Record First-Quarter Results

Growth across all business segments drives record first-quarter revenue and earnings per share.

Redmond, Wash. – Oct 28, 2010 – Microsoft Corp. today announced record first-quarter revenue of $16.20 billion for the quarter ended Sept. 30, 2010, a 25% increase from a similar period of the prior year. Operating income, net income and diluted earnings per share for the quarter were $7.12 billion, $5.41 billion and $0.62 per share, which represented increases of 59%, 51% and 55%, respectively, when put next with the prior year period.

Prior year results reflect the deferral of $1.47 billion of revenue, an impact of $0.12 of diluted earnings per share, referring to the Windows 7 Upgrade Option program and sales of Windows 7 to OEMs and retailers before general availability in October 2009. Without the deferral inside the prior year, first-quarter growth rates for revenue and operating income were 13% and 20%, and growth in net income and earnings per share were 16% and 19%, respectively.

” This was a great quarter, combining solid enterprise growth and continued strong consumer demand for Office 2010, Windows 7, and Xbox 360 consoles and games,” said Peter Klein, chief financial officer at Microsoft. ” Our ability to grow revenue while continuing to regulate costs allowed us to deliver another quarter of year-over-year margin expansion.”

During the quarter, Microsoft saw year-over-year growth across all business segments. Some of the highlights are these:

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Office 2010 is off to a fast start with revenue growing over 15% in its first full quarter in market.
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Microsoft continues to work out a healthy and sustaining business PC refresh cycle.
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Xbox 360 consoles grew 38%, outselling every competing console within the U.S. for all the past four months.
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For one more quarter, Bing continued to grow market share, while achieving major milestones in implementing Microsoft’s partnership with Yahoo.

” We are seeing improved business demand and adoption. Our enterprise agreement rates were strong, reflecting business commitment to Windows 7, Office 2010, and our server and database products,” said Kevin Turner, chief operating officer at Microsoft. ” Customer demand and excitement for our cloud and commercial online services continue to grow as demonstrated by major new customer wins this quarter for Windows Azure and by the significant customer interest in our recently announced Office 365 service.”

Business Outlook

Microsoft reaffirms operating expense guidance of $26.9 billion to $27.3 billion for the whole year ending June 30, 2011.

Webcast Details

Peter Klein, chief financial officer, Frank Brod, chief accounting officer, and Bill Koefoed, general manager of Investor Relations, will host a conference call and webcast at 2:30 p.m. PDT (5:30 p.m. EDT) today to talk about details of the company’s performance for the quarter and sure forward-looking information. The session might be accessed at http://www.microsoft.com/investor. The webcast will probably be available for replay throughout the close of commercial on Oct. 28, 2011.

Adjusted Financial Results and Non-GAAP Measures

Information has been provided to assist readers of the financial statements in further understanding the company’s financial performance, and the impact that certain items and events had on the financial results is probably not indicative of trends affecting the company’s business. For comparability of reporting, management considers this knowledge together with GAAP amounts in evaluating business performance.

In addition, we have now recast certain prior period amounts within our Form 10-Q that conforms to the manner we internally managed and monitored segment performance in the course of the current fiscal year.

These non-GAAP financial measures provided shouldn’t ever be considered alternatively for, or superior to, the measures of economic performance prepared in accordance with GAAP. A reconciliation of adjusted financial results and a reconciliation between reported and recast segment results are available our supplementary earnings slide deck at http://www.microsoft.com/investor

Source

This post is tagged: business segments, diluted earnings per share, earnings per share, enterprise growth, operating income, xbox 360 consoles