ET Desk
Microsoft Corp. said Thursday that its net income surged in the most recent quarter, the latest sign that businesses are again spending on technology.
Strong sales of Windows, particularly to Microsoft's corporate customers, and of Office 2010 helped boost results in the fiscal fourth quarter. Microsoft said it has sold more than 175 million licenses of the newest version, Windows 7, since it went on sale last year.
Big businesses stopped replacing aging computers, servers and software during the worst of the recession. Last quarter, the software maker said it saw signs that its corporate customers were starting to spend again.
This quarter's results, which follow a strong report from chipmaker Intel Corp., show the trend has accelerated. Microsoft Chief Financial Officer Peter Klein said billings for its multiyear agreements with big companies increased in the quarter.
"I think it was a good quarter," said McAdams Wright Ragen analyst Sid Parakh in an interview. "I would say a great quarter."
Microsoft's results are closely tied to the personal computer market. Worldwide PC shipments rose about 22 per cent in the quarter, according to the research group IDC.
For the April-June period, Microsoft's net income jumped 48 per cent to $4.52 billion, or 51 cents per share, from $3.05 billion, or 34 cents per share, last year.
Revenue rose 22 per cent to $16.04 billion, from $13.1 billion in the same period a year ago.
The results were stronger than Wall Street had expected. Analysts surveyed by Thomson Reuters had forecast net income of 45 cents per share on $15.3 billion in revenue.
Revenue for the group that makes Windows increased 44 per cent to $4.5 billion, more than a quarter of Microsoft's total. For its business software segment, Microsoft said sales of Office 2010 were primarily responsible for pushing that segment's revenue up 15 per cent to $5.3 billion.
Microsoft's server software group reported a 14 per cent increase in revenue to $4 billion.
Revenue also increased in the company's online search and advertising group and in its entertainment and devices segment, which includes the Xbox 360 video game system, computer games, mobile phone systems and other products.
But both those groups reported wider operating losses. Microsoft continued to invest more than it made from its Bing search engine as it worked to get a search advertising partnership with Yahoo Inc. up and running. Klein said Microsoft is on track to run Yahoo's search business in the US by the holidays.