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April 20, 2012updated 23 Aug 2016 2:56pm

Enterprise boosts Microsoft profits despite weak consumer divisions

Microsoft has posted an unexpectedly high profit for the quarter, boosted mainly by its Server, Windows and Business divisions - this was countered by weak performances from Windows Phone, Xbox and its Bing search platform.

By Allan Swann

The company posted a profit of $6.37bn for its third quarter 2012 up 12% from the year prior. Microsoft also posted revenues of $17.41bn, up 6% from the previous year.

Online services, which mainly focuses on the company’s search engine Bing, is still running at a heavy loss (-$479m for the quarter) despite improvements from last year’s $776m loss.

Microsoft’s Entertainment and Devices division, home to the Xbox video game console and Windows Phone has seen its profit entirely wiped out. This time last year it was posting a profit of $200m, it is now a loss of $299m. Its revenue was $1.62 billion, a decrease of 16%.

Microsoft is claiming Xbox sales are suffering due to a soft gaming console market. Video games have seen some slow down from mobile phone gaming.

The company’s mobile phone partnership with Nokia to provide the operating systems for its new Lumia devices has failed to take off – selling just 3 million units since November. Apple has sold 37 million iPhones in that time. Nokia’s results have suffered.

Its a testament to the strength of the Enterprise divisions that Microsoft Corp. has kept its ink black overall.

"We continue to execute well across our businesses, and we are seeing robust demand for our enterprise products and services," said COO Kevin Turner.

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"Our investments and offerings in the database platform and public, private, and hybrid cloud are helping our customers transform their operations to meet today’s evolving business demands."

The Server & Tools division posted a $4.57 billion profit up 14% from the prior year. Microsoft says this was driven by double-digit revenue growth in SQL Server and more than 20% growth in System Center revenue. The company is also getting good buzz about its imminent launch of Windows Server 8 (renamed this week to Windows Server 2012), which has been in beta testing since March 1. Microsoft has committed to launching it this year, alongside Windows 8’s consumer editions.

Read CBRs interview with Microsofts Server Product Manager Wayne Meyer about the development of Windows Server 2012 here.

The business division similarly posted good results, mostly on the back of the continued solid sales of Microsoft Office 2010. Its $5.81 billion for the quarter was a 9% increase on this time last year.

The Windows Division saw $4.62bn for the quarter (up 4%), boosted by increased adoption of Windows 7, the company estimating that 40% of enterprise desktops worldwide now run the OS.





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