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January 25, 2013

Microsoft Profits Drop in Q2 Despite Record Sales

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Microsoft reported record sales due to Windows 8 and other new products, but it wasn’t enough to keep the company’s profits from dropping.

The software giant announced a second-quarter revenue of $21.46 billion Jan. 24 — that’s up three percent from the same quarter last year. Operating income, however, dipped to $7.7 billion — a three percent year-over-year decline and profits were down four percent to $6.38 billion.

The company’s results failed to meet analysts’ expectations of $21.53 billion in revenue.

“Our big, bold ambition to re-imagine Windows as well as launch Surface and Windows Phone 8 has sparked growing enthusiasm with our customers and unprecedented opportunity and creativity with our partners and developers,” said CEO Steve Ballmer in a press release. “With new Windows devices, including Surface Pro, and the new Office on the horizon, we’ll continue to drive excitement for the Windows ecosystem and deliver our software through devices and services people love and businesses need.”

The Windows division posted revenue of $5.88 billion, a 24 percent increase from the period the previous year. Adjusting for the net deferral of revenue for the Windows Upgrade Offer and the recognition of the previously deferred revenue from Windows 8 Pre-sales, Windows division non-GAAP (generally accepted accounting principles) revenue increased 11 percent for the second quarter. Microsoft has sold more than 60 million Windows 8 licenses to date.

The business division posted $5.69 billion in revenue, a 10 percent decrease from the prior year period. Both the online services division and the entertainment and devices division enjoyed an 11 percent increase in revenue — online services to $869 million and entertainment to $3.77 billion.

“We see strong momentum in our enterprise business. With the launch of SQL Server 2012 and Windows Server 2012, we continue to see healthy growth in our data platform and infrastructure businesses and win share from our competitors,” said chief operating officer Kevin Turner.

“With the coming launch of the new Office, we will provide a cloud-enabled suite of products that will deliver unparalleled productivity and flexibility.”

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