The company yesterday reported a net income for the three months ended December 31 of $2.63bn, down 28% from $3.65bn a year earlier, on revenue that was up 6% at $12.5bn.
That’s impressive growth for any company, let alone one of our size, CFO Chris Liddell said during a conference call.
Microsoft had made the decision last year to defer revenue associated with the Windows and Office Technology Guarantee Program, which offers free or heavily discounted upgrades to buyers of Windows XP or Office in the fourth and first calendar quarters.
That deferral took $1.6bn off Microsoft’s second quarter top line, which would have grown 20% had all the revenue been recognized. That was a little more than the $1.5bn Microsoft had expected, a fact attributed to a PC market growing at 8% to 10% – healthier than expected.
The Client division, which covers Windows, was down 25% at $2.6bn as a result of $1.1bn of these deferrals. The Business division, which includes Office, was down 5% at $3.51bn.
It was the company’s entertainment devices division, where the Xbox lives, that was the strongest business unit performer, reporting revenue that was up 75% at $2.96bn, largely due to the game ‘Gears of War’, which drove sales of consoles and game disks.
The company has sold 10.4 million consoles since it launched late 2005, slightly better than its 10 million target, but Liddell was cautious in his outlook, predicting 12 million sold by the end of June, below the low end of previous targets.
The unit also continues to lose money – $289m in the December quarter, which was about the same as it lost a year earlier.
The Server & Tools division was up 17% at $2.85bn, and saw a $1bn profit, up from $767m.
Microsoft’s online services division, where it continues to plug its Live brand against the likes of Google and Yahoo, was up a more modest 5% at $624m – a 20% increase in ad revenue tempered by access revenue that continues its terminal decline.
