Did Windows Save Microsoft This Quarter?
Because its software populates the majority of the world’s personal computers, Microsoft (NASDAQ: MSFT) has suffered as a result of the shift in consumer and business spending to tablets and smartphones and away from personal computers. Last fall, the company launched an overhaul of its operating system, complete with touch-screen capabilities, and several companies in the industry had hoped that it would spark a revival in PC demand. But recent data has indicated that the new operating system has not stimulated much growth. In fact, the past week, research firms IDC and Gartner released figures showing double-digit declines in PC shipments.
When Apple (NASDAQ:AAPL) first designed the iPad, its launch shook up the personal computer industry and will forever be the device that first defined the post-PC world. At the time, its engineers made one very important decision, choosing to use an operating similar to its iPhone OS rather than its desktop OS, and that decision cemented the device’s success…
Microsoft made a different choice in its development of a tablet operating system, choosing to create a tablet that was much more akin to desktop, in terms of power and computing capabilities, than to a smartphone. After all, Windows developed its status as an iconic operating system on the desktop computer, and it makes perfect sense to create a device for the “post PC” era that is more a mini-computer than a large phone. That was the criticism that Apple received after releasing the iPad; the common refrain knocked the device for being “just a big iPhone.” But the company’s decision helped Apple define a product category and assert its dominance on the mobile device market.
As a result of its design choices, Microsoft has struggled to make its tablets competitive, and even its mobile operating system, Windows Phone 8, that powers handsets made by Nokia (NYSE:NOK) and HTC has had difficulties etching out market share. But Microsoft still has Windows, and higher sales at that division pushed the company’s fiscal third-quarter earnings up 19 percent.
“Our diverse business continues to deliver solid financial results, even as we navigate the evolving device market,” Chief Financial Officer Peter Klein in the earnings press release “Looking ahead, we will continue to invest in long-term growth opportunities to drive our devices and services strategy forward and deliver ongoing value to shareholders.”
After eleven years with the company, Klein announced that he will leave the company at the end of the fiscal year…
Microsoft has worked to expand its hardware offerings to better compete in the changing technology industry; in an attempt to “navigate the evolving device market” and popularize Windows 8, Microsoft launched the Surface tablet last October. The company is also preparing a model with a seven-inch screen, The Wall Street Journal reported.
Although, Microsoft is facing a tough environment, the company beat bottom line expectations and came close to surpassing top line expectations as well. For the quarter ended March 31, Microsoft reported a profit of $6.06 billion, or 72 cents per share, an increase from $5.11 billion, or 60 cents per share, in the year-ago quarter. Revenue for the period also rose, jumping 18 percent to 20.49 billion. Comparatively, analysts polled by Thomson Reuters had forecast earnings of 68 cents per share and revenue of $20.5 billion.
The results were buoyed up by a 23 percent increase in revenue from company’s Windows and Windows Live division, and a 11 percent risee in revenue generated by its servers and tools products.
Shares rose as much as 2.29 percent in after-hours trading on Thursday, hitting $28.79 per share.
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