Microsoft Announces Record Revenues

Despite Microsoft posting record revenues for the first

quarter of its financial year, concerns still remain over the strength and

future of Windows.

Revenues grew 11 per cent to $17.37 billion compared to the

same period last year, however operating profit rose just one per cent to

$7.2bn with the Windows, Server and Entertainment & Devices divisions all showed

slower growth.

Like the previous quarter’s results, the Q1 results were boosted

by Microsoft’s Office business, with Office 2010 helping to

drive revenues up by 7.7 per cent to $5.6bn and profits up 5.7 per cent to


Although the Windows section of Microsoft’s business grew (by

1.7 per cent to $4.87bn) this was below the two per cent growth seen in shipments of

PCs for the last quarter according to Gartner and IDC. The reason for this is most likely down to a

problem with piracy in China

and the Far East which is where most of the

growth in the PC business is happening at the moment.

Microsoft Revenues

Once again the Online Services division, including its Bing

search engine, was a major drain on the company, posting a loss of just under

$500m. However this is significantly down on losses of $560 last year and

revenue for the last quarter actually grew by 18 per cent to $625m – which

could suggest that it may have turned a corner.

Microsoft could be looking to bolster its online offerings

by purchasing the beleaguered Yahoo! which posted further disappointing results

earlier this week. However Microsoft could be facing competition from China’s Alibaba

and AOL’s Tim Armstrong.

Previously, the Entertainment & Devices divison, which

houses Xbox and Windows Phone products, had helped Office to bolster

Microsoft’s revenues but this quarter it saw profits dive by 8.8 per cent

despite revenues growing almost 10 per cent to $1.96bn.

With Windows 8 still a year away, analysts believe that

Microsoft need to come up the next big problem to solve rather than coming up

with the next version of an existing product. That could be key to Microsoft’s

continued success, but it’s not an easy problem to solve.