Microsoft earnings flat

Microsoft posted a quarterly revenue of $20.89 billion for the three months to December 31, up 5% from the same period in 2010.

Operating income and net income were both down slightly on the same period, at $US7.99 billion and $US6.62 billion respectively, compared with $US8.17 billion and $US6.63 billion, Microsoft said.

Diluted earnings per share were up $US0.78 per share compared with $US.078 in 2010, the company said.

The Wall Street Journal called the results a “mixed performance” with profit flat compared with the prior year but up two cents on analyst’s expectations.

Revenue growth was due to strong demand for the Office 365 suite of utilities and tools, the Wall Street Journal said.

The Microsoft Business Division reported a 3% increase in second quarter revenue to $US6.28 billion, with almost 200 million licenses of Office 2010 sold in the 18 months since launch, Microsoft said.

The company said revenue from Exchange and SharePoint grew by 10% or more over the prior year period.

The Server & Tools side of the business posted an 11% increase on the same period in 2010 at $US4.77 billion, which Microsoft said reflected double-digit revenue growth in Windows Server and SQL Server premium editions.

Microsoft chief executive Steve Ballmer said there had been strong demand for business products and services despite the soft PC market and continuing economic uncertainty in key parts of the world.

“We delivered record earnings per share by continuing to manage our costs while investing for future growth.”

The Windows and Windows Live Division had a 6% decline from 2010 at $US4.74 billion, Microsoft said.

The Entertainment & Devices Division had an increase of 15% with revenue of $US4.24 billion, with an Xbox 360 installed base of about 66 million consoles and 18 million Kinect sensors, the company said. 

Xbox LIVE had 40 million members worldwide, an increase of 33% from the prior year period, it said.

Chief operating officer Kevin Turner said the holiday season had been the strongest in Microsoft history.

Shares rose 2.8% to $US28.93 after the results were released, the Journal reported.

Microsoft was revising its operating expense guidance down to $US28.5 billion to $US28.9 billion for the full year ending June 30.