Feeds

Gadgets boost software-centric Microsoft quarter

Kinect all you want. PCs and servers rule

Bridging the IT gap between rising business demands and ageing tools

Gadgets gave Microsoft a boost during the Christmas shopping season, but Redmond remains heavily dependent on the sale of PC and server software.

On Thursday, Microsoft reported an 86 per cent jump in income for the unit that's home to the Xbox, Kinect, and Windows Phone 7, and the unit's revenue grew 55 per cent.

Microsoft pointed to that 55 per cent figure as one of the factors driving what it called "record" revenue and earnings per-share numbers for the whole company.

Chief financial officer Bill Klein said in a statement that the world's largest software company is "enthusiastic" about the consumer response to its holiday lineup of products, a line up that included the launch of Kinect. He said the company exceeded expectations by selling eight million units of the controller-free XBox addition t Xbox in 60 days.

Thanks to Kinect sales, Microsoft expects revenue for the unit will grow 50 per cent in the third quarter and 40 per cent for the fiscal year. There was no mention of sales expectations for phones running Windows Phone 7.

All those per centages are very impressive, but the reality is that E&D is a relatively small consideration for Microsoft. Operating income for the entertainment and devices unit was $679m on revenue of $3.6bn for Kinect, Xbox, and Windows Phone 7.

It was the business division, home to Office and the business applications, that was the company's top performer during the three months ending December 31, 2010. Operating income increased 34 per cent to $3.9bn, while revenue climbed 24 per cent to $6bn.

The server and tools unit - which handles SQL Server and Windows Server - had a solid quarter. Operating income increased 21 per cent to $1.7bn, with revenue growing 10 per cent to $4.3bn.

During the quarter, S&T's president Bob Muglia announced he's leaving the company. The departure is due to a disagreement with Ballmer over the so-called cloud. Ballmer believes Muglia has failed to sell enough Azure, Microsoft's Amazon-EC2-wannabe. Muglia's departure was not raised during Microsoft's earnings call with Wall Street analysts.</p

Meanwhile, the online unit - home to Bing - wobbled. In the period when Microsoft finally completed its integration with Yahoo! on search and ads, the group reported a loss of $543m compared to a $463m loss the previous year, despite an increase in revenue of 19 per cent to $691m.

Chief financial officer Peter Klein said there had been some "market-place disruption", but he expects the "benefits of integration to increase". Yahoo!-earned dollars will continue to dominate the revenue stream.

Operating income for the Windows and Windows Live unit dropped 39 per cent, while revenue fell 29 per cent to $3.3bn and $5bn. This partly due to the fact that Windows 7 launched in the fall of 2009. There was a spike in sales at launch, and at the same time, Microsoft came into a decent chunk of deferred cash from sales of the OS prior to launch. Microsoft claimed a total of 300 million Windows-7 licenses sold, with Windows 7 running on 20 per cent of internet-connected PCs.

Microsoft reported company-wide revenue of $19.9bn and earnings per share of $0.77. That was an increase of five and four per cent respectively, with the numbers adjusted for $1.7bn in deferred revenue from Windows 7. Without the Windows 7 adjustment, revenue and EPS grew 15 and 28 per cent. Income was flat landing at $6.6bn. ®

Application security programs and practises

More from The Register

next story
Stick a 4K in them: Super high-res TVs are DONE
4,000 pixels is niche now... Don't say we didn't warn you
BBC goes offline in MASSIVE COCKUP: Stephen Fry partly muzzled
Auntie tight-lipped as major outage rolls on
iPad? More like iFAD: We reveal why Apple fell into IBM's arms
But never fear fanbois, you're still lapping up iPhones, Macs
Philip K Dick 'Nazi alternate reality' story to be made into TV series
Amazon Studios, Ridley Scott firm to produce The Man in the High Castle
Amazon Reveals One Weird Trick: A Loss On Almost $20bn In Sales
Investors really hate it: Share price plunge as growth SLOWS in key AWS division
Bose says today is F*** With Dre Day: Beats sued in patent battle
Music gear giant seeks some of that sweet, sweet Apple pie
There's NOTHING on TV in Europe – American video DOMINATES
Even France's mega subsidies don't stop US content onslaught
You! Pirate! Stop pirating, or we shall admonish you politely. Repeatedly, if necessary
And we shall go about telling people you smell. No, not really
Too many IT conferences to cover? MICROSOFT to the RESCUE!
Yet more word of cuts emerges from Redmond
prev story

Whitepapers

Designing a Defense for Mobile Applications
Learn about the various considerations for defending mobile applications - from the application architecture itself to the myriad testing technologies.
Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Top 8 considerations to enable and simplify mobility
In this whitepaper learn how to successfully add mobile capabilities simply and cost effectively.
Seven Steps to Software Security
Seven practical steps you can begin to take today to secure your applications and prevent the damages a successful cyber-attack can cause.
Boost IT visibility and business value
How building a great service catalog relieves pressure points and demonstrates the value of IT service management.