The Wall Street Journal reported today that,the software giant posted surprisingly strong sales of its Xbox videogame consoles and Surface tablet computers, helping drive quarterly revenue and earnings that topped Wall Street expectations. In response, Microsoft's shares rose about 4% in after-hours trading Thursday.
Microsoft's numbers also reflected its ability to sell more software to companies, while finding holiday-season success with homegrown hardware like its new Xbox One.
"We feel good about our results this quarter," Microsoft Chief Financial Officer Amy Hood said in an interview. "We saw improvement in areas where we frankly needed to get better."
Those pockets of improvement included a doubling of Surface sales from the prior three-month period, to $893 million. The 15-month-old tablet computer got off to a slow start, but Microsoft has posted two quarters of strong revenue and unit growth.
Microsoft doesn't say how many of the devices it sells, and the company loses money on Surface, which came out with fresh versions in October.
For the fiscal second quarter ended Dec. 31, Microsoft's revenue rose 14% to $24.52 billion. Net income climbed to $6.56 billion, or 78 cents a share, compared with $6.38 billion, or 76 cents a share, a year earlier.
Microsoft continued to churn growth from software sales to companies, bucking the trend of revenue hiccups by some other major corporate-technology sellers, such as IBM.
Sales jumped 9.9% to $12.67 billion at the commercial business, which includes software to run computer servers, and company purchases of the Office bundle of email, word-processing software and spreadsheets. Corporate sales generate roughly two-thirds of Microsoft's gross profit.
Sales jumped 9.9% to $12.67 billion at the commercial business, which includes software to run computer servers, and company purchases of the Office bundle of email, word-processing software and spreadsheets. Corporate sales generate roughly two-thirds of Microsoft's gross profit.
Even the slumping personal-computer market didn't hit Microsoft as much as Wall Street expected. Ms. Hood said PC demand from big businesses rose for the third straight quarter, while PC sales to consumers are falling. That dynamic helps Microsoft because it makes more money from a sale of a higher-priced corporate PC than it does from a consumer machine.
Some analysts say Windows sales may be getting a temporary lift now from companies that are buying new PCs before Microsoft this spring stops technical updates for computers running the 12-year-old Windows XP.
