Microsoft beat Wall Street expectations for both revenue and earnings per share for its fiscal 2008 second quarter, attributing its strong quarter to sales of core client products such as Windows Vista and Office 2007, as well as Exchange and SharePoint server software.
For the quarter ended Dec. 31, Microsoft reported revenue of US$16.37 billion, an increase of 30 per cent year over year and a number that solidly beat the US$15.95 billion that Thomson Financial analysts had estimated. Last year for the same period Microsoft reported US$12.54 billion in revenue.
Analysts had been expecting the company to report a strong quarter even among economic uncertainty and fears that the U.S. economy is entering a recession.
Microsoft’s client business, on sales of Windows Vista, was especially strong in the quarter, with US$4.34 billion in revenue compared to US$2.59 billion a year ago. According to Microsoft, its client business has grown 20 per cent on average since Windows Vista was made available nearly a year ago, and the company believes Vista began hitting its stride for adoption in the second quarter. According to Microsoft, it has sold more than 100 million licenses for Vista.
On a conference call to discuss the results, Chief Financial Officer Chris Liddell noted that 60 per cent of Microsoft’s revenue in the second quarter came from outside the U.S., and said emerging markets are becoming increasingly important to the company’s revenue. In the past several years, Microsoft has made significant investments in selling its technology in developing countries such as India, Brazil and China.
Microsoft’s online business, which analysts are watching closely, grew 38 per cent in the quarter to US$863 million in revenue, with US$154 million of that being attributed to Microsoft’s US$6 billion purchase of digital media services firm aQuantive last year. Online advertising revenue grew 38 per cent.
