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Microsoft grows earnings, revenue in Q1, helped by server software

Juan Carlos Perez | Oct. 25, 2013
Microsoft's revenue and earnings per share grew more than 15 percent each in its first fiscal quarter of 2014, during which enterprise server software products sold particularly well, the company said Thursday.

ballmer

Microsoft's revenue and earnings per share grew more than 15 percent each in its first fiscal quarter of 2014, during which enterprise server software products sold particularly well, the company said Thursday.

Microsoft generated revenue of US$18.5 billion in the quarter, ended Sept. 30, up 16 percent compared with last year's first quarter and topping the $17.8 billion consensus estimate of Wall Street analysts polled by Thomson Financial.

Net income came in at $5.2 billion, or $0.62 per share, up from $4.5 billion, or $0.53 per share, in last year's first quarter. That comes out to about a 17 percent increase in earnings per share.

These numbers include the deferral of $113 million of revenue primarily related to Windows 8.1 pre-sales, the company said. Meanwhile, last year's first-quarter report included the deferral of $1.4 billion of revenue related to several Windows and Office offers and pre-sales.

On a pro forma basis, which excludes certain one-time items, earnings per share were $0.63, down 3 percent year on year but exceeding the consensus expectation of analysts by 9 cents.

"Our devices and services transformation is progressing and we are launching a wide range of compelling products and experiences this fall for both business and consumers," said CEO Steve Ballmer in a statement.

Ballmer, who is slated to retire at some point in the coming 10 months or so, was referring to the company's ongoing effort to reinvent itself from a provider of packaged software into a provider of hardware devices and cloud-hosted services.

In this quarter, Microsoft is introducing a new financial reporting format for breaking down its revenue and profits. The format splits the company's business into two main buckets: Devices & Consumer and Commercial. The first bucket in turn has three subcategories, and the other one has two subcategories.

Devices & Consumer revenue grew 4 percent to $7.46 billion. Microsoft highlighted that in this category Windows OEM revenue fell 7 percent year on year, while revenue from the company's Surface tablets grew to $400 million, including an increase in revenue and units sold compared sequentially with the fourth fiscal quarter of 2013. Search advertising, provided via websites like the Bing search engine, grew 47 percent year on year.

In the Commercial category, revenue grew 10 percent to $11.2 billion, helped by strong sales of server software products like SQL Server, Lync, SharePoint and Exchange, as well as by a jump of more than 100 percent in revenue from enterprise cloud services.

When it announced the new reporting format last month, Microsoft said that it would provide more transparency and clarity into its business. The company also said the new format better represents the company's transformation into a provider of hardware devices and cloud services.

 

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