REDMOND (dpa-AFX) - Software giant Microsoft Corp. (MSFT) said Thursday after the markets closed that its second quarter profit fell 4% from last year, hurt by higher operating expenses as well as weaker sales in its business and entertainment & devices divisions.
However, the company's quarterly earnings per share came in above analysts' expectations.
'We saw strong growth in our enterprise business driven by multi-year commitments to the Microsoft platform, which positions us well for long-term growth,' said Peter Klein, chief financial officer at Microsoft. 'Multi-year licensing revenue grew double-digits across Windows, Server & Tools, and the Microsoft Business Division.'
Microsoft shares are currently losing 2.03% in after hours trading after closing the day's regular trading session at $27.63, up 2 cents. The shares trade in a 52-week range of $26.26 to $32.95.
Microsoft's two major divisions make the Windows operating system and Office business software. About 90% of the PCs around the world run on the company's windows operating system.
The company has also launched a Windows-based tablet 'Surface' in a bid to take on Apple Inc.'s (AAPL) hugely successful iPad.
Microsoft's business division revenue fell 10% year-over year to $5.69 billion in the second quarter. Excluding the impact of the Office upgrade offer and pre-sales, the division's adjusted revenue increased 3% for the second quarter.
Second quarter revenue from the company's Windows division surged 24% to $5.88 billion. Excluding the net deferral of revenue for the Windows upgrade offer and the recognition of the previously deferred revenue from Windows 8 Pre-sales, the division's adjusted revenue grew 11%. This marks 6th time in the last 7 quarters that the division's revenue has declined year-over-year.
The company's latest operating system - Windows 8 - became generally available on October 26. It is designed to work equally well on touchscreen devices and conventional ones. The company said Thursday that it has sold over 60 million Windows 8 licenses to date.
Microsoft achieved this despite the continued softness in demand in the PC market. Earlier this month, industry research firm International Data Corp. said global PC shipments in the fourth quarter of 2012 fell 6.4% from last year, as the popularity of latest smartphones and media tablets continued to hit PC demand. This marked the first time in more than five years that the PC market has seen a year-on-year decline during the holiday season, leading to annual decline also.
Server and tools division's revenue rose 9% to $5.19 billion in the second quarter, driven by double-digit percentage revenue growth in SQL Server and System Center. In September, Microsoft launched Windows Server 2012. However, this marks the second time in eleven quarters that the division has not posted a double digit revenue growth.
Second quarter revenue from the company's entertainment and devices division fell 11% year-over-year to $3.77 billion. Xbox continues to be the top-selling console in the U.S. During the quarter, Microsoft launched Windows Phone 8 with a broad array of carriers and devices.
Online services division revenue for the quarter rose 11% year-over-year to $869 million, while the division's operating loss narrowed to $283 million from $459 million a year ago.
For the second quarter ended December 31, 2012, the world's largest software company reported net income of $6.38 billion or $0.76 per share, compared to $6.62 billion or $0.78 per share for the year-ago quarter.
The latest quarter results include $1.33 billion of revenue deferred for Windows upgrade offer, office upgrade offer and pre-sales, and video game deferral. The results also include $783 million of revenue recognized for Windows 8 pre-sales.
Excluding the the impact of deferred revenue and recognition of previously deferred revenue for Windows 8 Pre-sales, adjusted earnings for the latest quarter were $0.81 per share.
On average, 33 analysts polled by Thomson Reuters expected the company to earn $0.75 per share for the second quarter. Analysts' estimates typically exclude special items.
Operating income for the second quarter fell 3% to $7.8 billion, while its adjusted operating income rose 4% to $8.3 billion.
Redmond, Washington-based Microsoft said revenue for the second quarter rose 3% to $21.46 billion from $20.89 billion in the same quarter last year. Excluding the deferral and recognition, adjusted revenue for the latest quarter was $22.00 billion. Twenty-seven analysts had a consensus revenue estimate of $21.53 billion for the second quarter.
Operating expenses for the quarter surged 10% to $7.99 billion from $7.25 billion a year ago.
Microsoft reaffirmed its fiscal year 2013 operating expense guidance of $30.3 billion to $30.9 billion.
The company stopped making specific profit or revenue forecasts in January 2009, citing market volatility.
Copyright(c) 2013 RTTNews.com. All Rights Reserved
Copyright RTT News/dpa-AFX
© 2013 AFX News
