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Microsoft shares up on strong Q3 results

Warwick Ashford

Microsoft shares rose 6% on better-than-expected third quarter earnings of $5.2bn, a 17% increase compared with the same period a year ago.

Microsoft attributes the strong numbers in part to a $113m revenue deferral, mostly in relation to Windows 8.1 pre-sales.

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Windows OEM revenue dropped 7%, but devices and consumer revenues increased to $7.46bn, up 4%. Windows Pro revenue saw its second consecutive quarterly growth.

SQL Server revenue grew more than 30%, while Exchange, Lync, and SharePoint also saw double-digital growth. Cloud revenue saw growth of 103%.

"Our devices and services transformation is progressing," said chief executive Steve Ballmer, adding that Microsoft planned to launch a wide range of new products in the coming quarter.

“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,” Ballmer said.

In contrast with the previous quarter – when Microsoft was forced to take a write down of $900m after poor sales of its first tablet – the company said revenues from Surface grew to $400 million, with sequential growth in revenue and units sold over the prior quarter.

However, Microsoft did not provide any sales figures for its first hardware device.

Microsoft also gave no indications about who is to replace Ballmer as chief executive when he retires this year.

In a conference call to discuss earnings, Ford boss Alan Mullaly declined to comment on rumours that he was being considered for the top job, according to the BBC.

Other contenders include Stephen Elop, who resigned as the head of Nokia after Microsoft announced it would acquire Nokia's mobile phone unit for $7.2bn in September.

Elop is now head of Devices and Services at Nokia, but once the deal is completed, he is expected to return to Microsoft where he was a former senior manager.

Ballmer, who is set to retire by the end of 2012, has been at Microsoft since 1980, taking over from founder Bill Gates as CEO in January 2000.


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