Microsoft earnings slip, but Windows has gain
BY MICHAEL LIEDTKE Associated Press
Friday, January 25, 2013
1/25/13 at 4:30 AM
SAN FRANCISCO - Microsoft's latest quarterly earnings slipped, even as the world's largest software maker showed modest progress adjusting to a shift away from the personal computers that have been its financial foundation for decades.
The results announced Thursday are the first to include Windows 8. The program is a dramatic overhaul of the Microsoft Corp. operating system that powers most PCs. Windows 8 came out Oct. 26 with slightly more than two months left in Microsoft's fiscal second quarter.
Microsoft is counting on Windows 8 to help the company extend its franchise into tablet computers while still reaping revenue from a new breed of PCs. The redesigned software displays applications in a mosaic of interactive tiles instead of a staid menu.
Although the Windows 8 sales haven't been as impressive as investors hoped, revenue in Microsoft's Windows division climbed 24 percent from the previous year.
When Windows 8 finally hit the market, Microsoft also unveiled its own tablet computer, Surface, as a showcase for a streamlined version of the operating system. Microsoft didn't immediately disclose how many Surface devices were sold in the October-December period.
"I don't think they want to provide that because it won't be impressive," technology analyst Patrick Moorhead said.
BGC Financial analyst Colin Gillis said he still has faith in Microsoft, saying the company "has multiple revenue streams that are still very nice businesses."
"I kind of like the Windows segment," he said, adding that the 24 percent growth was "a little stronger than expected."
But another Microsoft division that includes another big moneymaker - the company's Office suite of software - didn't fare as well. Revenue in the Office division declined 10 percent, a shortfall that may have spooked some investors. Analyst Josh Olson of Edward Jones believes many of Microsoft's corporate customers may have held off on buying Office because a new version of that program is scheduled to come out early this year.
Microsoft earned $6.4 billion, or 76 cents per share, during the final three months of the year. That was down 4 percent from $6.6 billion, or 78 cents per share, a year earlier.
The company's total revenue rose 3 percent from last year to $21.5 billion.
Microsoft's stock shed 57 cents, or 2.1 percent, to $27.06 in Thursday's extended trading, after the release of results.
Original Print Headline: Microsoft earnings slip, but Windows has gain
Microsoft Corp. CEO Steve Ballmer holds a Samsung laptop run by the Windows 8 operating system. Bloomberg file