Software giant Microsoft Corp. (Nasdaq: MSFT) reported strong profit and sales growth in its first fiscal quarter, driven largely by sales of its flagship Windows and Office software and the launch of the latest blockbuster Halo video game.
For its first fiscal quarter ended September 30, 2010, Microsoft reported EPS of 62 cents. Analysts on average were expecting earnings of 55 cents per share, according to Thomson Reuters. Operating income, and net income a the quarter were $7.12 billion, $5.41 billion, which represented increases of 59 percent and 51 percent respectively, when compared with the prior year period. Sales increased 25 percent to $16.2 billion, ahead of analysts’ $15.8 billion average estimates.
“This was an exceptional quarter, combining solid enterprise growth and continued strong consumer demand for Office 2010, Windows 7, and Xbox 360 consoles and games,” said Peter Klein, chief financial officer at Microsoft in a statement. “Our ability to grow revenue while continuing to control costs allowed us to deliver another quarter of year-over-year margin expansion.”
Among the highlights were a 15 percent sales growth in Microsoft’s Office 2010 software, and a 38 percent increase in sales of Microsoft’s Xbox 360 game console.
“We ended up in this great sweet spot in business spending that was re-emerging after the downturn,” Microsoft’s general manager of investor relations, Bill Koefoed, said in an interview. Increased business spending “aligned just perfectly” with Microsoft’s product launches, according to Koefoed.
Revenue from Microsoft’s Windows division increased 66 percent to $4.8 billion. Office and other business software brought in $5.1 billion, a 14 percent jump, over last year. The group that makes server software reported a 12 percent increase in revenue to $4 billion. Microsoft’s online revenue, which comes primarily from search advertising, was up 8 percent to $527 million.
The company reaffirmed its operating expense guidance of $26.9 billion to $27.3 billion for the full year ending June 30, 2011.