Microsoft profits and shares dip despite record revenues from Windows 8

Microsoft’s share price slips after it reports a drop in profits, despite record revenues boosted by Windows 8 operating system (OS) sales

Microsoft’s share price slipped after reporting a fall in profits despite record revenues boosted by sales of its Windows 8 operating system (OS).

Net income for the last three months of 2012 (Microsoft's fiscal year 2013 second quarter) was $6.4bn, down 4% compared with the same period for 2011, while revenues rose 3% to a record $21.5bn.

Revenues were boosted by the company’s Windows division, where revenues rose 24% following Microsoft's launch of Windows 8 OS. To date, more than 60 million Windows 8 (OS) licenses have been sold.

But revenue growth was largely counteracted by increased spending on marketing, while increased earnings by the Windows division was partly offset by lower sales of the company’s Office products.

Gains in online services, server and enterprise software helped offset a decline in the entertainment division which produces the Xbox console and games.

"Our big, bold ambition to re-imagine Windows as well as launch Surface and Windows Phone 8 has sparked growing enthusiasm with our customers and unprecedented opportunity and creativity with our partners and developers," said Microsoft chief executive Steve Ballmer.

Microsoft in the post-PC era

Analysts said Microsoft benefited from operating in a number of different technology sectors, protecting it from weakness in the PC market, according to the BBC.

However, Microsoft did not release sales figures for its Surface tablet computer and Windows Phone 8, which some analysts took to mean that the figures were less than impressive.

Microsoft’s shares were down more than 1% at $27.25 in after-market trading after the financial results were announced for Microsoft’s second 2013 fiscal quarter.

Analysts said that, despite record revenues, the results left investors unclear about how Microsoft will cope in the post-PC era, according to The Telegraph.

Earlier this week, chip maker Intel reported its net income for the last three months of 2012 fell 27%, compared with the same period in 2011.

Revenues were down 3% during the period, when PC sales were hit by the increasing popularity of smartphones and tablets.

According to market analyst firm Gartner, worldwide PC shipments totalled 90.3 million units in the fourth quarter of 2012, a 4.9% decline from the fourth quarter of 2011.

Microsoft's results come a day after Apple reported record quarterly revenues of $54.5bn. However, flat profits, disappointing iPhone sales figures and fears about future growth prospects pushed Apple shares down 12% on Wednesday, wiping about $50bn off the company's value.

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