Microsoft revenues beat forecasts, but Xbox and Bing disappoint

By Lee Kaelin on

Software giant Microsoft beat analyst predictions after posting better than expected results for their latest financial quarter today, buoyed by a unexpected rise in sales of its Windows operating system, according to the latest figures reported by the Guardian.

Microsoft reported a new record high in revenue, at $17.41 billion, a 6 percent increase on last year. Profits fell however, to $5.11 billion or 60 cents a share, down slightly from $5.23 billion the previous year. The slightly lower profit margin is largely due to the Entertainment division reporting a loss of $229 million, in contrast to last year's profits of $210 million.

The Server and Tools division was the most profitable during the period, which saw revenues increase by 14 percent to $4.57 billion. Windows and Windows Live division grew four percent to $4.62 billion, with the firm pointing out that business sales were currently stronger than consumer sales. Software sales in its Business division, which includes the highly profitable Office software, rose by nine percent to $5.81 billion.

It wasn't all great success for the iconic American software firm though, with the Entertainment and Devices division, which contains both the Xbox 360 games console and its Windows Phone mobile OS groups reporting a slump of 16 percent for the period, down to just $1.62 billion. Microsoft says the currently weak games console market is to blame for the turnaround in revenue.

Despite not posting any financial results for its mobile OS, ongoing payments to Nokia and a recent charge of $250 million in marketing funds for Windows Phone certainly contributed to the drop.

Search engine money pit Bing continued to look a disaster with no clear profits in sight. Whilst recording a six percent increase in revenue to $707 million, the search engine group ultimately reported a loss of $479 million. It was however, better than the reported loss of $776 million it suffered during the same period last year. 

"We're driving toward exciting launches across the entire company, while delivering strong financial results," said chief executive Steve Ballmer, during the announcing of the financial results.

The company did note that results in the same period a year ago were boosted by a $461 million tax benefit. Shares in Microsoft rose by three percent in after-hours trading to $31.94, up from their 4PM close of trading at $31.01 upon hearing the quarterly results.

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