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Microsoft Posts Higher Revenue, Lower Profits

1/20/2012 09:21:09 AM Eastern
Redmond, Wash. - Microsoft reported higher revenue, but slightly lower net income in the quarter ended Dec. 31, 2011.

Microsoft reported revenue of $20.89 billion for the quarter, a 5 percent increase from the prior year period.

Net income was $6.62 billion, down from the prior year's $6.63 billion. Operating income was $7.99 billion down from the prior year's $8.17 billion.

Prior year results include recognition of $224 million of deferred revenue related to the Office 2010 technology guarantee program, Microsoft said.

"We delivered solid financial results, even as we prepare for a launch year that will accelerate many of our key products and services," said Steve Ballmer, CEO at Microsoft. "Coming out of the Consumer Electronics Show, we're seeing very positive reviews for our new phones and PCs, and a strong response to our new Metro style design that will unify consumer experiences across our phones, PCs, tablets, and television in 2012."

The Entertainment & Devices division posted revenue of $4.24 billion, an increase of 15 percent from the prior period. The Xbox 360 installed base now totals approximately 66 million consoles and 18 million Kinect sensors. Xbox LIVE now has 40 million members worldwide, an increase of 33 percent from the prior year period, Microsoft said.

"In addition to the continued strength of our commercial business, this holiday season was the strongest in Microsoft history, thanks to good sales execution and compelling products like Xbox 360 and Kinect," said Kevin Turner, chief operating officer at Microsoft. "We are seeing a lot of excitement for new devices, from Windows 7 Ultrabooks to new Windows Phones, as well as growing anticipation for Windows 8."

The Windows and Windows Live division posted revenue of $4.74 billion, a 6 percent decline from the prior period. Microsoft has sold over 525 million Windows 7 licenses since launch.

The Online Services division reported revenue of $784 million, a 10 percent increase from the prior year period. Bing organic U.S. market share grew to 15.1 percent while Bing-powered US market share, including Yahoo! properties, was approximately 27 percent.
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