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Microsoft Posts Higher Sales, Lower Profits

Redmond, Wash. – Microsoft reported higher revenue, but lower operating and net income during its fiscal second quarter ended Dec. 31.

Quarterly revenue was $21.46 billion for the quarter compared to $20.88 billion year on year, while operating income was $7.77 billion, lower than the prior year’s $7.99 billion and net income of $6.38 billion which was lower than the prior year’s $6.62 billion.

The quarter’s financial results reflect the net deferral of revenue for the Windows Upgrade Offer, Office Upgrade Offer and Pre-sales, and the Entertainment and Devices Division Video Game Deferral, partially offset by the recognition of previously deferred revenue for Windows 8 Pre-sales, the company said.

The entertainment and devices division posted revenue of $3.77 billion, a decrease of 11 percent from the prior year period. Adjusting for the Video Game Deferral, the division’s non-GAAP revenue decreased 2 percent for the second quarter. Xbox continues to be the top-selling console in the United States, the company said.  However console sales were 5.8 million, down 28 percent.

Microsoft reported Windows Phone sales were four times higher than last year. And Windows 8 licenses are at 60 million to date.

The online services division reported revenue of $869 million, an 11 percent increase from the prior year period. Online advertising revenue grew 15 percent driven by an increase in revenue per search.