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Microsoft delivered a good set of results for Q1 2012 with revenue up 7% to $17.37bn - roughly on target against external expectations - and net income of $5.74bn, which was up 6%. Much of the credit for the quarter goes to the Server and Tools division (up 10%) but within the Business section sales of Office 2010 and Office 365 went particularly well – both consumers and enterprises are still buying into Office – resulting in a 8% revenue lift for the division to $5.62bn.
The Windows and Windows Live division broadly tracked the PC market, which expanded by a low 1% - 3% (as buyers turned to tablets, and smartphones), resulting in just 2% revenue growth to $4.87bn and a 1% drop in net income. While consumers shunned PC’s, enterprises showed their ongoing commitment with enterprise PC sales up 5%, thus aiding Microsoft’s business revenue.
The loss making Online Services Business grew by 19% driven by an increase in search and display ads but there is a lot of work to do here. “In Search, monetization of our ad platform remains below our expectations,” was Microsoft’s comment. That inevitably leads to speculation as to whether Microsoft will move to acquire Yahoo!, something Microsoft vehemently denies. Could a joint venture with a partner be on the cards though as many suggest?
The main takeaway is that Microsoft has done well this quarter but there is still underlying weakness in its consumer business and it has yet to be decisive in the cloud and tablet/mobile areas. TechMarketView subscribers can read a more in-depth analysis in HotViewsExtra later today.
