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Microsoft posts an 18 percent increase in profits despite Windows 8 woes

Shrugs off the impact of falling PC sales
Fri Apr 19 2013, 11:47
Microsoft logo at its Redmond headquarters

SOFTWARE DEVELOPER Microsoft posted a surprisingly good set of second quarter financial results with revenues and profits up despite declining PC sales.

Microsoft's second quarter fiscal 2013 financials were expected to echo those of Intel by reflecting the plight of firms that rely heavily on PC sales. However Microsoft bucked the trend with a 17 percent rise in revenues from the same period in 2012 to $20.4bn, with profits rising by 18 percent to $6bn.

With Microsoft's Windows 8 being widely blamed for the downturn in PC sales, many industry analysts and market watchers were expecting the firm's financial results to mirror PC sales. However the firm's ability to restructure its complex business software licensing scheme and cost cutting measures seemingly worked as operational costs rose less than the firm's increase in revenues.

Microsoft's revenues outside of its core Windows and Office businesses are gaining pace, with its Entertainment and Devices division, which includes Xbox, posting revenues of $2.53bn, a 56 percent increase from the same period last year. As for its Windows division, despite the firm's poorly received Windows 8 operating system it posted revenues of $5.7bn, a 23 percent increase from a year ago.

Microsoft also managed to increase its cash balance, which now stands at $74.4bn. The firm's cash reserve is the real worry for competitors who might think they have the firm over a barrel, because $74bn might allow it to simply buy its way out of the messes it is in with Windows 8, Windows Phone and Bing.

Microsoft's ability to generate steady revenue and profits despite lacklustre products and a waning PC industry highlights how resilient the firm is. It also gives CEO Steve Ballmer some respite from those that say he has led the company into a revenue black hole by missing the boat on web advertising, smartphones and tablets. µ


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