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Microsoft Posts Record Quarter on Strong Office, OS Sales

Fri, 10/29/2010 - 8:21am
Andrew Berg

Microsoft yesterday posted a record 51 percent jump in profits in the first quarter of its fiscal year 2011, on strong sales of Windows 7, Microsoft Office and its XBox Live console.

The company reported net income of $5.4 billion or $0.62 per share for the first quarter, compared to $3.6 billion or $0.40 per share in the year-ago quarter. Additionally, the company saw $16.2 billion in revenue. 

Windows 7, the company's latest iteration of its desktop OS, drove the fourth consecutive quarter of double-digit revenue growth for the division. In the first quarter, Windows OEM revenue, which represents approximately 75 percent of the Windows and Windows Live division, was up 11 percent.

Microsoft's cloud-based platform, Azure, also saw traction during the quarter.  Subscriptions to Azure, which allows enterprises to connect thousands of devices over the cloud, grew 40 percent sequentially.

At Microsoft's annual developer conference yesterday, the company announced enhancements to Azure that will help customers build new applications and migrate existing applications to the cloud and allow developers and ISPs to build unique applications.

The company shied from mentioning where its mobile division fits into its bottom line, as Windows Phone 7 devices have only recently been announced, with the first launches coming in the next couple of weeks in the United States.

Microsoft CFO Peter Klein did say that he expects the company's Entertainment and Devices division, which handles Windows Phone 7, to do well over the holidays. 

"Considering the momentum and high level of consumer interest in our offerings, we expect this division's revenue to grow roughly 30 percent for the second quarter and in the mid-20s for the full fiscal year," Klein said in a transcript of the company's earnings call provided by Seeking Alpha.

Microsoft's stock was selling at $26.78 in early morning trading.

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