Microsoft reports record Q1 sales in "exceptional quarter"

Microsoft reported record sales of $16.2bn (£10.2bn) for its first quarter ending 30 September, 25% up on the previous year, with net income up 51% at just over $5.4bn.

By Billy MacInnes

Microsoft reported record sales of $16.2bn (£10.2bn) for its first quarter ending 30 September, 25% up on the previous year, with net income up 51% at just over $5.4bn.

But after taking account of a deferral of $1.47bn in the first quarter results for 2010 for the Windows 7 Upgrade Option program and sales of Windows 7 to OEMs and retailers before general availability in October last year, the first quarter revenue growth rate fell to 13% and net income was up 16%.

CFO Peter Klein described it as "an exceptional quarter, combining solid enterprise growth and continued strong consumer demand for Office 2010, Windows 7, and Xbox 360 consoles and games".

He stated businesses were adopting Windows 7 and Office 2010 "at historically high rates" and consumer demand for products was also driving the results. To date, over 240m Windows 7 licences have been sold and Office 2010 sales are 20% ahead of Office 2007 over the same time period.

Klein said the vendor expected "business PC and server hardware purchasing to remain the high priority for most businesses. The business refresh cycle should continue through at least the remainder of this fiscal year". Windows division revenue would be "roughly in line with the PC market" in the second quarter and beyond.

Despite the success of Apple's iPad and its tailored OS, Klein said Microsoft was "confident that tablets will expand the PC market and we're enthusiastic about our opportunity, along with our partners, to bring Windows to additional form factors and new usage scenarios".

Bill Koefoed, general manager, investor relations, revealed that sales to small and medium business had been "exceptionally strong with revenue up 30%" which was partly fuelled by a 15% increase in the number of partners selling its products around the world.

He claimed customers of all sizes were "embracing cloud services from Microsoft". The vendor had "significant cloud momentum and we are leading the industry through this transformation".

Microsoft claims to have tripled the number of business customers using cloud services and says that 70% of seats are new customers to the company.



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