In what might be the last earnings report presented under Steve Ballmer, Microsoft announced a profit of $6.56 billion, up 2.8% from $6.28 billion in the same quarter last year, for the quarter ended December 31, 2013. It also recorded revenue of $24.52 billion, up from $21.46 billion from the same quarter last year.
– Microsoft announced a successor to Xbox 360 gaming console, Xbox One and the company sold 7.4 million Xbox console units into the retail channel, including 3.9 million Xbox One consoles and 3.5 million Xbox 360 consoles in the quarter.
– The company had launched Surface 2 tablet towards the end of the last quarter, but the company has no disclosed the amount of units it sold during the period. However, Microsoft revealed that Surface revenue doubled sequentially, from $400 million in the first quarter to $893 million in the second.
– Revenues from Xbox Live transactions increased by 25%
– Microsoft currently has 3.5 million Office 365 Home Premium subscribers.
– Bing US marketshare up 18.2% and search advertising revenue grew 34%.
– SQL server business continued to gain market share with revenue growing double-digits.
– System Center showed continued strength with double-digit revenue growth.
– Commercial cloud services revenue more than doubled.
– Office 365 commercial seats and Azure customers both grew triple-digits.
Revenue from Devices and Consumer Licensing business, which includes which includes OEM revenues dipped slightly to $5.38 billion from $5.70 billion in the previous quarter last year. However, Windows OEM Pro revenue grew 12%. The company also noted that this includes revenue deferred on sales of Windows 7 with an option to upgrade to Windows 8 Pro at a discounted price as part of a windows upgrade offer. The company did not disclose the amount of Windows 8 licenses bought by OEMs and customers in this quarter.
Devices and Consumer Hardware business that includes Xbox One and Surface tablet did well this quarter mostly due to the launch of Xbox One. It went up to $4.73 billion this quarter from $2.82 billion in Q2 last year.
Microsoft’s Devices and Consumer Other business, which includes revenues from Windows Store, Xbox Live, Office 365, and other smaller businesses, dipped to $1.79 billion in Q2-Fy14 from $1.99 billion in Q2-Fy13.
Commercial Licensing division that includes services such as Office, developer tools and several server side offerings, showed slightly higher revenues this quarter of $10.89 billion, up from $10.14 billion last year.
Revenues from Commercial Other increased to $1.78 from $1.40 billion last year.
Microsoft is expecting intense competition in all of Microsoft’s markets to continue in the coming quarter. The company believes that its shift to services, presents execution and competitive risks to it. It also mentioned in its forward looking statements that there was a risk of it investing significant amounts in new products and services that may not be profitable. It also warned investors that acquisitions, joint ventures, and strategic alliances, including the acquisition of Nokia’s Devices and Services business, may have an adverse effect on Microsoft’s business.
Note: Microsoft changed the way they list and report businesses they operate in starting last quarter. It’s no longer easy to figure out how one particular product is faring in the market by looking at the revenues made by a business under Microsoft. It looks like every business unit has a hero product with a lot of other struggling units clubbed under it. The company claims this shift is part of its change to services model, but it does not explain the confusing names that make it very difficult to distinguish one business from the other at a look.