The firm yesterday reported a respectable quarter, with the growth driven largely by its server software and the Xbox 360 games console. It’s online unit, where the company is focusing a lot of resources, continue to under perform.
For the company’s first fiscal quarter to September 30, Microsoft saw income up 11% at $3.48bn, on revenue that was also up 11% compared to last year at $10.81bn.
Earnings per share was $0.35, three cents better than the top end of the company’s previously issued guidance and four cents better than analysts polled by Thomson had been, on average, expecting.
The Client business was up a mere 4% on last year to $3.3bn, reflecting the fact that many people are holding onto their wallets ahead of the availability of Vista, currently scheduled for enterprises next month and consumers in January.
The Business division, the new home of Office, also scheduled for a refit soon, was also up 4% to $3.43bn. Sales of Dynamics were up 19%, the company said.
The star performer in terms of software was the Server & Tools division, which saw revenue growth of 17% to $2.5bn, driven by a 30% increase in revenue from SQL Server 2005.
The fastest growing business was the smaller Entertainment & Devices division, which reported a whopping 70% increase, to $1.03bn, on the back of Xbox 360 sales.
The poorest performer was also the area where Microsoft is banking its future as a software provider. The Online Services business saw a 4% year over year decline in revenue, to $540m, mainly due to lower revenue from internet access services, a terminal trend Microsoft has no interest in stopping.
Ad revenue, where Microsoft hopes to ape Google’s success, was up 5%. Microsoft CFO Chris Liddell said he expects to start seeing better growth there over the coming year.
