Microsoft announced another down quarter this morning. Revenues in the September quarter were down 14 percent to $12.92 billion, and net profits declined even further to $3.57 billion, or $0.40 a share. The consensus estimate was $0.32, so Wall Street is happy and the shares are rallying (up 10 percent in early-morning trading).
Investors will forgive the poor performance coming out of the recession (are we out of that yet?), because they hope that yesterday’s launch of Windows 7 will bring back the shine to the stock. If you look at revenues for the Windows business, it certainly looks like both businesses and consumers have been delaying purchases and upgrades in anticipation of the new operating system. The Windows business saw revenues decline by 37 percent, or $1.7 billion, from last year, to $2.6 billion. The closely-related Business division, which includes Office, was down $500 million in revenues, to $4.4 billion.
Microsoft needs to revive these franchises with Windows 7 at a time when it is increasingly under attack by cloud-based productivity apps from Google and others. But Windows 7 should give Microsoft some cover as corporations go through their robotic upgrade exercises.
Looking at Microsoft’s online business, once again the loss in that business ($480 million) almost matched its revenues ($490 million). We saw the same trend last quarter, as Microsoft continues to invest heavily in this business via Bing and other products.
Below is a table breaking down Microsoft’s revenues by operating division (click to enlarge):
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