Microsoft posts record revenue as Windows sales slide

SOFTWARE REDEVELOPER Microsoft reported record revenues for its second fiscal quarter but saw a six per cent revenue decline in its Windows division.

Last week Microsoft warned that lagging PC sales could hit the firm's bottom line, but yesterday's announcement that the firm had posted a five per cent increase in revenue to $20.9bn suggested the warning was premature. However digging a bit deeper shows that not only did Microsoft's profit take a $10m hit from the same period last year to $6.63bn, but its Windows division suffered even worse.

Microsoft's two cash cows had mixed results with Microsoft's Business Division, home to the firm's Office suite, raking in $6.28bn, a three per cent increase from a year ago. The firm's Windows and Windows Live Division took in $4.74bn, down six per cent from last year but that didn't stop Microsoft from claiming it had sold 525m Windows 7 licenses since its launch.

Although Microsoft's Windows sales were down from 2010, the firm shouldn't be too worried. Windows 8 is expected by the end of the year and Microsoft CEO Steve Ballmer mentioned that new Windows releases helps boost sales, stating, "We delivered solid financial results, even as we prepare for a launch year that will accelerate many of our key products and services."

In other areas Microsoft's Entertainment and Devices Division enjoyed a 15 per cent increase in revenue to $4.24bn thanks to its Xbox operations. Interestingly Microsoft made no reference to Windows Phone, perhaps because it is making more money from Android licensing than Windows Phone.

Microsoft's second quarter results are pretty impressive for a company that has been painted as being in crisis. Commentators have rightly focused on Microsoft's inability to compete with Google on web search and smartphones and the decreasing reliance on Windows in contemporary computing devices, yet Microsoft continues to produce steady, if unspectacular results.

However Microsoft's continued reluctance to mention Windows Phones sales figures while it shouts numbers for Windows, Office and its Xbox operations will simply add to the widely held view that Microsoft is unable to successfully expand into new markets. µ