November 26, 2020

Video Game Products Lift Microsoft in Quarter

SAN FRANCISCO — A slowdown in personal computer sales hurt Microsoft’s quarterly earnings, but the software company made up for it with strong sales of its Kinect and Xbox video game products.

Microsoft reported Thursday that net income in its third quarter rose 31 percent to $5.23 billion, or 61 cents a share, from $4 billion, or 45 cents a share, in the quarter a year ago.

Revenue climbed 13 percent to $16.43 billion, from $14.5 billion.

A survey of analysts by Thomson Reuters had forecast net income of 56 cents a share and revenue of $16.19 billion.

“We delivered strong financial results despite a mixed PC environment, which demonstrates the strength and breadth of our businesses,” Peter Klein, chief financial officer at Microsoft, said in a statement. “Consumers are purchasing Office 2010, Xbox and Kinect at tremendous rates, and businesses of all sizes are purchasing Microsoft platforms and applications.”

The company, based in Redmond, Wash., said that quarterly revenue for the unit that includes Office word processing, spreadsheet and presentation software, grew 21 percent to $5.25 billion. Office 2010 is the fastest-selling version of Office ever, Microsoft said, with businesses deploying the software at five times the rate of its predecessor.

However, revenue from the division that includes the Windows operating system fell 4 percent to $4.45 billion.

Microsoft’s entertainment and devices, which includes the Xbox 360 video game console, Kinect game controller and the Zune music player, gained 60 percent to $1.94 billion. Kinect, a sensor that lets players interact with video games without having to hold a controller, did particularly well, selling 2.4 million units in the quarter. Customers bought 2.7 million Xbox 360s.

Meanwhile, sales of computer server software, used in corporate data centers, increased 11 percent to $4.1 billion.

Revenue from Microsoft’s online properties like the MSN portal and Bing search engine rose 14 percent to $648 million. The unit lost $726 million in operating income, continuing a pattern of losses.

Two years ago, Microsoft signed an agreement to take over Yahoo’s search business to create a more formidable rival to Google. However, Yahoo’s chief executive, Carol A. Bartz, said last week that the partnership had not yielded the expected financial results for Yahoo and that technical glitches by Microsoft were to blame.

Downbeat reports about personal computer shipments in early 2011 had raised questions about Microsoft’s future dominance. Microsoft has developed an operating system for smartphones, but it is on relatively few phones. It does not have software that makers of tablet computers want. Japan’s earthquake and consumer appetite for tablets caused computer shipments during the first three months of the year to decline 3.2 percent, according to IDC.

But subsequent to the reports, Intel posted strong earnings that cast doubt on slumping computer sales. Intel executives said that they were seeing an impact from tablet computer in their chip sales, but that it was limited.

Still, Apple, for instance, sold 4.69 million tablets in the first three months and has a big backlog of additional orders. Tablets running the Honeycomb version of Google’s Android operating system are starting to appear in stores.

Meanwhile, Microsoft is trying ramp up its presence on mobile phones through an agreement with Nokia, the Finnish handset maker. The two companies are working together on new mobile phones that would use Microsoft’s Windows Phone operating system.

In after-hours trading, Microsoft’s shares lost 2.1 percent, to $26.16. They added 1.2 percent in regular trading.

Article source: http://feeds.nytimes.com/click.phdo?i=543e055ff900f4b2e40efc65abd39f51

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