Microsoft stunned Wall Steet with its latest financial results, based on the success of Windows Vista, Office 2007 and the Halo 3 game. First quarter revenues jumped by 27% to $13.76 billion, and profits by 23% to $4.29 billion. Sales beat expectations by more than $1bn.
In the Client division (Windows), sales increased by 25% from $3.3bn to $4.1bn, of which $3.4bn was profit. However, this was lower than the official launch quarter this year, where Windows sales hit $5.3bn. Microsoft said it had shipped more than 85 million copies of Vista, not including business sales under the corporate volume licensing programme.
In a conference call, Microsoft's chief financial officer Chris Liddell said Vista shipments of more than 85 million compared with 45 million sales of Windows XP during the equivalent period after its launch.
The Business division (around 90% Microsoft Office) increased sales by 20% to $4.1bn, and profits by 21% to $2.7bn.
The Entertainment & Devices division increased sales by 91% to $1.9bn to register its second profitable quarter, thanks mainly to sales of the Halo 3 game. It made a profit of $165m, compared with a loss of $142m in the same quarter last year. Microsoft sold 1.8 million Xbox 360 games consoles during the quarter.
The Online Services division (MSN, Hotmail, Live etc) increased revenues by 25% to $671m, but it lost $264m, compared with a loss of $142m in the same quarter last year. This was expected, due to the heavy investments Microsoft is making in new Live services and accompanying server farms, but it's hardly impressive.
Bloomberg reported that Microsoft "shares surged as much as 13 percent to $36.02 yesterday in extended trading, a price last reached in July 2001." According to Bloomberg:
"This is a big deal,'' said Jane Snorek, a Minneapolis- based analyst at First American Funds, which manages $55 billion in assets, including Microsoft shares. "It will change the sentiment on Microsoft absolutely.''
