Okay, will this shut people up? I keep hearing the same typical internet dopes saying that Vista is failing, based entirely on the fact that they haven’t bought it yet, with no numbers to back themselves up. Tonight, Microsoft delivered its quarterly earnings report, and it’s a good one. Expectations were that Microsoft would report earnings per share of 46 cents, but it beat that with 50 cents EPS on $14.4 billion in revenue and net operating income of $6.59 billion (net income of $4.93 billion).
The revenue includes $1.67 billion of deferred revenue from free upgrade given to Windows Vista from the previous quarter. Profits were up 65%, revenue up 32%, earnings per share up 72%.
Microsoft also gave guidance for the next quarter of revenue of $13.1-13.4 billion, operating income of $5-5.2 billions and earnings per share of 37-39 cents. They also gave earnings guidance for the next fiscal year (July 2007-June 2008) of revenue of $56.5-57.5 billion, operating income of $22-22.5 billion and earnings per share of $1.68-1.72.
The Client division (Windows) had revenue of $5.2 billion, up $2.1 billion from the same quarter last year. That division turned a profit of $4.2 billion, compared with a profit of $2.5 billion last year.
The Server and Tools division had revenue of 2.7 billion, up $353 million from the same quarter last year. That division turned a profit of $979 million, compared with a profit of $744 million last year.
The Online Service Business division had revenue of $623 million, up $61 million from the same quarter last year. That division had an operating loss of $200 million, compared with a loss of $24 million last year.
The Business division (Office) had revenue of $4.8 billion, up $1.2 billion from the same quarter last year. That division turned a profit of $3.4 billion, compared with a profit of $2.4 billion last year.
The Entertainment and Devices division (includes Xbox, Zune, other hardware) had revenue of $929 million, down $253 million from the same quarter last year. That division suffered a loss of $315 million, better than a loss of $402 million last year.
Other operations had revenue of $4 million, up from, well, nothing, the same quarter last year. Corporate expenses cost the company $1.5 billion, compared with a cost of $1.3 billion last year.
During the earnings call, Microsoft said sales of Premium versions of Vista jumped 71% in the quarter (presumably compared to sales of XP Media Center and Tablet), which is great for earnings. If more people buy a more expensive version, Microsoft can make more money even without growing the market (however, PC sales grew a phenomenal 10%!).
Online ad revenue grew 23%.
Microsoft shipped 500,000 Xbox 360s in the quarter, not a good thing:
After selling as much as 1.8 million consoles per quarter last summer, the company sold only 500,000 consoles in the previous quarter to retailers.
Revenue for the Entertainment Division in the fiscal third quarter was down a staggering 21.5% annually, to $929 million; and the division posted a $315 million loss, though that’s less of a loss than the $402 million posted during the same quarter last year. Microsoft CFO Chris Liddell told analysts to expect revenue for the Entertainment and Devices division for the fiscal fourth quarter to fall as much as 11%.
More coverage by Todd Bishop.
In after hours trading, Microsoft stock is up 4.12%.