Microsoft has reported a smaller quarterly profit than Apple for the first time in 20 years.
Though the company reported net income up 30% to $5.2bn from $4bn, and revenues up 13% to $16.4bn from $14.5bn, both were smaller than figures released by Apple last week showing $6bn profits on revenues of $24.7bn.
This could mark a key moment in the history of both companies as Apple’s iPad tablet computer and iPhone smartphone have started new markets while the traditional desktop and laptop computer markets — the areas where Microsoft dominates — are waning.
Last month, research firm Gartner lowered its PC unit forecast for 2011 and 2012, as consumers turn to tablet computers, and limitations in mobile PCs remained.
Gartner lowered its projection for worldwide shipments of PCs this year to 387.8 million units, or 10.5% growth, from an earlier projection of 15.9% growth.
Gartner research director George Shiffler had said, "We expect growing consumer enthusiasm for mobile-PC alternatives, such as the iPad and other media tablets, to dramatically slow home mobile-PC sales, especially in mature markets."
Microsoft chief financial officer Peter Klein said consumer PC shipments dropped 8% in the quarter. Netbooks, which became popular during the recession, also plunged 40%, partly because of defections to tablet computers, he said.
The decline overshadowed Microsoft’s better-than- anticipated performance and increased PC demand.
In the third quarter, Microsoft reported an operating income of $5.7bn, an increase of 9.6% compared to $5.2bn in the same quarter prior year.
The company posted a net income of $5.23bn or $0.61 per share in the third quarter of fiscal 2011, compared to net income of $4.01bn and EPS of $0.45 in the same quarter previous fiscal.
Microsoft business division revenue grew 21% year-over-year. Since its release last spring, Office 2010 has become the fastest-selling version of Office in history, and the integrated innovation with SharePoint, Exchange, Lync and Dynamics CRM is driving significant growth for the division, the company said.
Server and tools revenue grew 11% year-over-year, the fourth consecutive quarter of double-digit growth.
Windows 7 remains the fastest selling OS with 350 million licenses sold. However, revenue for the segment was down 4% in the third quarter, in line with the PC trends, excluding prior year launch impact.
Online services division revenue grew 14% year-over-year primarily driven by increases in search revenue. Bing’s US search share increased to 13.9% the third quarter.
Microsoft’s entertainment and devices division grew 60% year-over-year, fueled by Kinect for Xbox 360.
Microsoft chief operating officer Kevin Turner said they delivered strong third quarter revenue from their business customers, driven by outstanding performance from Windows Server, SQL database, SharePoint, Exchange, Lync and increasingly their cloud services.
