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Microsoft Profits Up 31% As Windows Sales Fall

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Microsoft has announced it most recent financial results today and they have shown that the software giant has fallen behind Apple in terms of profits and revenue.

Last week Apple recorded profits of $6 billion with revenues of $24 billion for the first three months of 2011. Today Microsoft announced profits of $5.2 billion on revenues of $16.4 billion, which were up, year-on-year, by 31 and 13 percent respectively. Despite the large jump in profit, the fact that Apple has leaped ahead of Microsoft will be seen as a key moment for both companies coming as it does after Apple overtook Microsoft in terms of market capitalisation last year. The success of the iPad and iPhone will obviously be seen as a key factor affecting these results but the success of Android will also be seen as another factor affecting Microsoft’s PC market.

Looking at the results themselves, Microsoft will be worried by the slide in sales of the Windows 7 OS by 4 percent and the market felt similarly as shares in the company fell following the announcement. On the plus side, sales of its Office applications grew during the quarter and revenue at the firm's Entertainment and Devices division grew by 60 percent, fuelled by sales of Xbox consoles and Kinect controllers. "Consumers are purchasing Office 2010, Xbox and Kinect at tremendous rates, and businesses of all sizes are purchasing Microsoft platforms and applications," said chief financial officer Peter Klein.

With strong uptake of its cloud-computing service, Microsoft will need to look to growth areas such as this to bolster its profits into the future as competition from Apple and Google grows.

Source: Microsoft

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