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Record Revenues Power Q1 Microsoft Profits

October 29, 2010

Thanks to record revenue amounts topping $16 billion, Microsoft posted first-quarter net profits of $5.41 billion dollars on Thursday–a 51 percent increase over the same period last year.

The revenues, which were actually $16.2 billion, marked a 25-percent increase, the most ever for the Redmond, Washington-based corporation. According to BBC News, sales of Microsoft Windows increased 66 percent over first quarter 2009, to $4.8 billion, and the company’s business software, including the Office line of products, earned $5.1 billion, a 14 percent increase.

Strong sales of Microsoft’s Xbox 360 videogame console also contributed to the record revenue amounts, according to AFP reports. Xbox 360 hardware sales increased 38 percent to 2.8 million units, while the company reported earnings of $350 million for “Halo: Reach,” the latest entry in a popular series of science fiction software titles available exclusively for Microsoft’s console.

“This was an exceptional quarter, combining solid enterprise growth and continued strong consumer demand for Office 2010, Windows 7, and Xbox 360 consoles and games,” Microsoft chief financial officer Peter Klein told the BBC, and chief operating officer Kevin Turner told AFP that the company was also experiencing growth in cloud development, as well as in its Bing search engine.

Some analysts see that shift from traditional software development to cloud computing as a key to Microsoft’s future. As Rob Helm, the managing vice president of research for the independent tracking firm Directions On Microsoft, told AFP, “Microsoft is really counting on the cloud to pull in new customers.”

“The cloud is going to turn customers who buy something from Microsoft and go away and not send the company another dime for six years into subscribers,” he added. “It is going from a business like car sales to a business like providing electricity. People will be paying Microsoft every month.”

Toan Tran, an analyst with Morningstar, told BBC News that Microsoft “had a very good quarter”¦ Windows is still doing well, Office is doing well, and servers and tools are doing well. The big three businesses are firing on all cylinders as the PC upgrade cycle continues.”

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