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Windows Helps Microsoft Beat Earnings Predictions in Q2

Windows retakes its place as the top revenue producer for the company. Business and Entertainment divisions see a dip in performance.

Microsoft continues to increase profits, despite a recent spate of media doom-and-gloom reports about the struggles of Windows 8.

Second fiscal quarter results showed healthy increases in Windows-related revenue, along with dips in some other areas.

Revenue for the quarter, which ended on Dec. 31, 2012, was $21.5 billion, up from $20.9 billion in the previous year's Q2 period. The company beat earnings-per-share expectations for the quarter by one cent at 0.76 earnings per share. Profit or net income was $6.4 billion, which was down compared with the $6.6 billion figure reported in last year's Q2 period. After-hours trading showed a 2.06 percent dip in Microsoft's stock price today, per Yahoo Finance reporting.

The Q2 earnings were affected by various deferrals associated with Microsoft's promotional sales campaigns, including the Windows and Office upgrade offers. However, Microsoft's financial results for this quarter also included earnings from early Windows 8 sales.

Unlike Microsoft's Q1 results, the Windows Division was the top money maker in this period. It brought in $5.9 billion, up 24 percent compared with last year's Q2 period. Server and Tools placed second, bringing in $5.2 billion revenue, up 9 percent vs. last year's Q2 period. The Online Services Division was up 11 percent, delivering $869 million in revenue for the quarter.

The two divisions that faltered this quarter were the Microsoft Business Division and the Entertainment and Devices Division. The Business Division pulled in $5.7 billion, down 10 percent compared with last year's Q2 revenue result. Microsoft's earnings statement claims that Business Division earnings were really down just 3 percent for the quarter, using non-GAAP accounting methods, if upgrade and presales offerings are considered. The Entertainment and Devices Division produced $3.8 billion in revenue, down 11 percent compared with last year's Q2 period. If that figure were adjusted with non-GAAP accounting, factoring in a video game revenue deferral, the revenue decrease for the Entertainment and Devices Division would be just 2 percent, according to Microsoft.

Microsoft noted some positive signs on the horizon. Chief Financial Officer Peter Klein indicated in a released statement that the company's licensing renewals across the Windows, Server and Tools and Business Divisions "grew double digits" for the quarter.

Microsoft's Q2 financials can be accessed at this page.

About the Author

Kurt Mackie is online news editor for the 1105 Enterprise Computing Group.

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