Some economists argue that while businesses have recovered a great deal from the recession, American workers have not. There is some proof of that in Microsoft’s (NASDAQ: MSFT) latest quarterly results.
Analysts would argue that the pace of Windows sales has fallen off because of modest global PC sales. That slowness, however, is not just due to the age of the current version of Windows. Consumers have less money to spend on PCs.
Microsoft’s fiscal first-quarter revenue was higher than a year ago by 7% to $17.37 billion. EPS for the period that ended September 30 was higher by 10% to $0.68 a share.
The results by division show that business demand for Microsoft products was strong. The Microsoft Business Division reported $5.62 billion in first-quarter revenue, which was higher by 8% compared with the same period a year ago. The Server & Tools segment posted $4.25 billion in revenue, a 10% increase over the prior year period, and the sixth consecutive quarter of double-digit revenue growth, the company said.
The picture was quite different at the Windows division, where revenue was only higher by 2% to $4.87 billion. Sales of entertainment products, primarily the Xbox, were higher by 9% to 1.96 billion, despite the launch of new products like Kinect. This is more evidence that the consumer side of Microsoft’s business is soft.
One way to look at Microsoft’s results is that the part of the company that competes with Oracle (NASDAQ: ORCL) and SAP (NYSE: SAP) has signaled a recovery in IT expenditures at enterprises and large corporations. The part of Microsoft that measures consumer activity has struggled.
Douglas A. McIntyre