Microsoft has declared itsfirst quarter results and beat expectations by a penny with sales 9% higher at $15.1 billion and profits up just 2% to $4.37 billion.
The main successes were the Server and Tools division, which increased sales by 18% to $3.4 billion, and the Business Division, where sales grew by 20% to $4.9 billion. Server and Tools benefited from the sales of Windows Server 2008 and SQL Server 2008. The Business Division, which sells Office 2007, made $3.3 billion, which was the majority of Microsoft's profits.
The Client division, which sells Vista and XP, increased its sales by only 1.9% to $4.2 billion, and its earnings fell by 3.6% to $3.3 billion. (Update: Windows Vista sales grew by 22% in the quarter. PC sales grew by 15%, according to Gartner, but a chunk of that was made up of netbooks running Windows XP.)
Entertainment and Devices, where the bulk of the money comes from the Xbox, saw sales fall 6% to $1.8 billion, but profits climbed 6% to $178 million. However, the division came in well ahead of expectations, which were for sales of $1.45 billion. (Update: Microsoft launched halo 3 in the same quarter last year, so it wasn't expected to match that.)
Microsoft also lowered future expectations, but not by as much as expected. In the earnings release, Chris Liddell, chief financial officer, said: "In a challenging economic environment, the first-quarter results exhibit the strength and diversity of our business model."
According to CNBC:
Guidance is where the Microsoft story starts to get interesting. Most analysts expected the company to miss its second fiscal quarter expectations because of the widespread economic slowdown gripping the globe. The shortfall against Wall Street expectations wasn't nearly as bad as some had feared with Microsoft expecting a new EPS range of 51 cents to 53 cents.
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