Microsoft Profits Jump 60%

The software maker roars past Wall Street estimates on the back of robust Windows 7 demand.
Microsoft on Thursday said strong sales of its new Windows 7 operating system helped propel the company to record revenue in its fiscal second quarter.

Revenues rose 14% compared to the same period a year ago, to $19.02 billion. Net income jumped 60% to $6.6 billion, while earnings per share climbed 57%, to 74 cents. Wall Street analysts polled by Thomson Reuters were, on average, expecting EPS of 59 cents.

"Exceptional demand for Windows 7 led to the positive top-line growth of the company," said Microsoft CFO Peter Klein, in a statement. "Our continuing commitment to managing costs allowed us to drive earnings performance ahead of revenue growth," said Klein.

Sales of Windows and related products rose 29%, to $5.1 billion, while sales of server software increased 19%, to $3.8 billion.

Still, Microsoft saw weakness in some of its lines during the quarter, which ended Dec. 31.

Sales of Microsoft Office were down 2.9%, and revenue from online services, such as advertising, fell 2.3%, to $581 million. Xbox and related entertainment sales were also down, declining 9.7%, to $2.9 billion.

Microsoft said it shipped 5.2 million Xbox 360 consoles during the quarter, compared to 6 million shipped in the previous year's period.

Overall, Microsoft executives said they were pleased with the performance of Windows 7, which debuted Oct. 22.

"This is a record quarter for Windows units," said chief operating officer Kevin Turner. "We are thrilled by the consumer reception to Windows 7 and by business enthusiasm to adopt Windows 7," said Turner.

Microsoft shares were up 1.54%, to $29.61, in after hours trading Thursday.

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