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Microsoft sees profits slump despite growing Windows and Surface sales

Profit slips 6.6 percent to $5.66bn
Fri Apr 25 2014, 10:04

Microsoft Surface 2 with 4GMICROSOFT saw its profits slump in its third fiscal quarter of 2014, despite growing Windows, Surface and Xbox revenues.

Microsoft reported its third quarter 2014 results on Thursday, announcing that it saw $20.4bn in revenue for the quarter and profits of $5.66bn - a decline of 6.6 percent year on year. Revenue was down slightly too, slipping 0.4 percent compared to the third quarter of 2013. These figures are down from Microsoft's second quarter earnings too, with the firm having posted $6.5bn profit on $24.5bn in revenue in January.

Saying that, however, Microsoft's third quarter financials did come in above market expectations, and the firm did demonstrate growth across almost all divisions.

Windows sales were four percent up during the quarter, Microsoft said, likely boosted by businesses switching away from Windows XP. During its earnings call, the firm added that 90 percent of enterprise desktop PCs worldwide are now running Windows 7 or Windows 8, but, Microsoft didn't mention which proportion of those are running the newer version.

Microsoft didn't mention how many Surface tablets it sold either, but boasted that revenues grew 50 percent year on year to almost $500m. However, it seems sales of the Windows tablet have slowed compared to last quarter, when Microsoft posted revenues of $893m from the division.

While Microsoft's own tablet sales were down, it seems the release of Microsoft Office on iPad, which saw 12 million downloads in a week, has done it some favours. The firm boasted that it added one million Microsoft Office 365 Home subscribers during the three months, taking its total number to 4.4 million. Bing did pretty well too, with Microsoft boasting that the search engine's US share grew 18.6 percent and advertising sales were up 38 percent, and Azure also saw its revenues grow 150 percent.

Microsoft CEO Satya Nadella said, "This quarter's results demonstrate the strength of our business, as well as the opportunities we see in a mobile-first, cloud-first world. We are making good progress in our consumer services like Bing and Office 365 Home, and our commercial customers continue to embrace our cloud solutions. Both position us well for long-term growth.

"We are focused on executing rapidly and delivering bold, innovative products that people love to use."

Xbox sales likely helped Microsoft beat expectations, too, with Microsoft revealing that it sold two million consoles during the quarter, 1.2 million of which were newer Xbox One devices.

It's unclear how Windows Phone did during the quarter however, but with Microsoft's buyout of Nokia set to be finalised today, it likely won't be long until we find out. µ


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