Microsoft Corporation (MSFT) on Thursday posted financial results for the three-month period ended December 31, 2010, which translates to the company's second fiscal 2011 quarter.
Net income fell slightly from a year ago, but the company earned $6.63 billion in net income, or $.77 per share, with $19.95 billion in revenue.
A big deal was made on Wall Street about the early announcement for the earnings information. It turns out the earnings information was found on Microsoft's own website, slightly ahead of schedule because of a smart bot owned by Selerity.
According to the Wall Street Journal, Selerity is a company that gathers event data for traders. They seemed to be the first to have stumbled upon the Microsoft earnings release.
Selerity has a real-time search engine, which scans the 'investor relations' websites of public companies, picked up what appeared to be Microsoft's second-quarter earnings release this afternoon — well before its expected release after the market's close. Selerity said they confirmed the information was not a draft. So, they sent it out to institutional investors through its feed on StockTwits, a microblogging service that is closely followed by investors and traders.
Investors seemed pleased with the early information, sending Microsoft's shares up about 1.4 percent in regular trading. Shares were up further by about 0.5 percent to $28.90 in extended trading. A closer look at detailed earnings reveals some interesting trends. Gaming and business sales formed the basis for Microsoft's good news. They sold eight million Kinect sensors in 60 days during the Christmas season.
Peter Klien, CFO at Microsoft, explained:
The pace of business spending, combined with strong consumer demand, led to another quarter of operating margin expansion and solid earnings per share growth.
Microsoft's Entertainment & Devices Division had a growth of 55 percent in revenue because the success of the Kinect sensor boosted sales of Xbox 360 consoles, Xbox Live subscriptions, and Xbox games.
Their Business Division revenue grew 24 percent year-over-year. They say Office 2010 is the fastest-selling consumer version of Office in history, with license sales over 50 percent ahead of Office 2007 for an equivalent period following launch. It appears big companies that put off buying new tech during the worst of the recession are slowly moving towards upgrading their systems. Chief operating officer Kevin Turner sung praises for the company's Windows 7 operating system:
Windows 7 continues to be the fastest-growing operating system in history, and our recent System on a Chip announcement demonstrates our commitment that Windows will have the power and flexibility to run everywhere and on every device.
The company says they have now sold over 300 million Windows 7 licenses. That's up from the 240 million figure we heard in October 2010. In November last year, Forrester Research reported that 10 percent of business PCs in North America and Europe were running Windows 7. The company claims that Windows 7 is now running on over 20 percent of Internet-connected PCs.
The company was literally glowing about Windows Azure developer momentum continuing with Pixar Animation Studios, ADP with NVoicePay and others demonstrating compelling uses of the platform. What was quietly left out of the earnings report and conference call were tablets and Windows Phone 7. Mobile Digest asked an interesting question in a piece titled "Was Windows Phone 7 outsold by Windows Mobile In Q4 2010?"
Earlier this week Greg Sullivan, a senior product manager at Microsoft, told Bloomberg that they had shipped more than two million copies of the Windows Phone 7 operating system last quarter. With some clever detective work by Mobile Digest, they pulled up these facts:
- Windows Mobile 6.5 sales during the second quarter of 2010 were 3,096,400
- Windows Mobile 6.5 sales during the third quarter of 2010 were 2,247,900
Oddly missing from Microsoft quarterly earnings is a break out of Windows Phone 7 facts. By the time Mobile World Congress at Barcelona rolls on February 14, we are sure Microsoft will have a new spin on Windows Phone 7. Maybe even some real sales numbers to customers, not just 'shipped' items. BSN will be there to hear Microsoft's claims for that little product.
Bill Gates and Steve Ballmer are to be commended for keeping the Windows franchise leading the world for installed PC operating systems and applications as well as paying their shareholders a profit. This even though revenue dropped 30 percent in the Windows division to $5.1 billion, in a quarter when worldwide personal computer shipments only grew about three percent. Clearly, the Apple franchise is giving Microsoft a good run for the consumer's dollar.