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Impending Office release slows Microsoft sales

25 Jan 2013

Microsoft has reported a lowered profit as sales of their Office software slowed due to the impending new release of the product.

Despite claiming record revenue of US$21.5 billion during the second quarter, the software manufacturer saw shares fall by 1.4%.

Operating income, net income, and diluted earnings per share for the quarter stood at $7.77 billion, $6.38 billion, and $0.76 per share.

“Our big, bold ambition to reimagine Windows as well as launch Surface and Windows Phone 8 has sparked growing enthusiasm with our customers and unprecedented opportunity and creativity with our partners and developers,” says Steve Ballmer, CEO, Microsoft.

“With new Windows devices, including Surface Pro, and the new Office on the horizon, we’ll continue to drive excitement for the Windows ecosystem and deliver our software through devices and services people love and businesses need.”

Windows:

The Windows Division posted revenue of $5.88 billion, a 24% increase from the prior year period, beating analyst expectations in the process.

Microsoft claims to have sold over 60 million Windows 8 licenses to date, which is a similar rate of sales to Windows 7 three years earlier.

The company did not however disclose sales of its new Surface tablet, labelled as a direct competitor to Apple's iPad.

"We saw strong growth in our enterprise business driven by multi-year commitments to the Microsoft platform, which positions us well for long-term growth,” says Peter Klein, chief financial officer at Microsoft.

“Multi-year licensing revenue grew double-digits across Windows, Server & Tools, and the Microsoft Business Division.”

Server & Tools:

The Server & Tools business reported $5.19 billion of revenue, a 9% increase from the prior year period, driven by double-digit percentage revenue growth in SQL Server and System Center.

“We see strong momentum in our enterprise business. With the launch of SQL Server 2012 and Windows Server 2012, we continue to see healthy growth in our data platform and infrastructure businesses and win share from our competitors,” says Kevin Turner, chief operating officer at Microsoft.

“With the coming launch of the new Office, we will provide a cloud-enabled suite of products that will deliver unparalleled productivity and flexibility.”

Business:

The Microsoft Business Division posted $5.69 billion of revenue, a 10% decrease from the prior year period.

Adjusting for the impact of the Office Upgrade Offer and Pre-sales, Microsoft Business Division non-GAAP revenue increased 3% for the second quarter.

Revenue from Microsoft’s productivity server offerings – collectively including Lync, SharePoint, and Exchange – continued double-digit percentage growth.

Entertainment:

The Entertainment and Devices Division posted revenue of $3.77 billion, a decrease of 11% from the prior year period.

Adjusting for the Video Game Deferral, the division’s non-GAAP revenue decreased 2% for the second quarter. Xbox continues to be the top-selling console in the United States.

What do you make of Microsoft's financial results? Tell us your thoughts below

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