Microsoft posted quarterly revenue of $18.5 billion and earnings of 62 cents per share, up 17 percent — topping Wall Street’s expectations by both measures for the quarter ended Sept. 30.
In the closely watched PC market, Microsoft saw a 7 percent decline in overall revenue from Windows licensed to hardware makers — reflecting the difficult market for traditional desktop and notebook computer sales. But that result was actually better than the company had expected.
The company said revenue in its newly formed Devices and Consumer segments rose 4 percent overall to $7.46 billion.
Sales to businesses fueled the stronger-than-expected result overall. Overall Commercial revenue (including Windows, Office and server products for businesses) rose 10 percent to $11.2 billion.
Licensing revenue in the company’s consumer business (including Windows and Office for consumer PCs) declined to $4.3 billion, from $4.7 billion in the same quarter a year ago.
Reporting specific financial numbers for its Surface hardware business for the first time, Microsoft said revenue from Surface tablets and accessories rose to $400 million in the quarter. Overall hardware revenue, including sales of the Xbox console in addition to Surface, was just under $1.5 billion.
Microsoft CEO Steve Ballmer said in the company’s earnings release: “Our devices and services transformation is progressing and we are launching a wide range of compelling products and experiences this fall for both business and consumers. Our new commercial services will help us continue to outgrow the enterprise market, and we are seeing lots of consumer excitement for Xbox One, Surface 2 and Surface Pro 2, and the full spectrum of Windows 8.1 and Windows Phone devices.”
Revenue grew 10 percent to $11.2 billion overall in the company’s Commercial segments, driven in part by strong growth in SQL Server revenue.
Analysts polled by Thomson Reuters expected quarterly revenue of $17.8 billion, up 11 percent, and earnings per share of 54 cents, up 2 percent.
Microsoft is reporting its results in new segments reflecting its “One Microsoft” corporate reorganization. Here are the results by segment.
Here’s a breakdown showing what’s included in each of the new segments.
Devices and Consumer
1) Hardware: Surface, Xbox and Xbox Live, and other hardware
2) Licensing: Windows OEM, Windows Phone, Office Consumer, IP Licensing
3) Other: Bing & MSN, Office 365 Home Premium, 1st-Party Video Games
4) Licensing: Windows Enterprise, Server Products, Office Business, Dynamics, Unified Communications
5) Other: Enterprise Services, Office 365, Windows Azure