Windows 8 and Surface Drive Dec. 2012 Earnings

The launch of Windows 8 and Surface helped Microsoft to a 3% revenue increase for the quarter ended Dec. 31, 2012, the second quarter of Microsoft’s 2013 fiscal year. However, launch costs and accounting plus slow PC sales reduced Windows and Office profitability and produced a 3% year-over-year decline in the company’s operating income. Microsoft did not report Windows 8 and Surface deployment rates, which it hopes will accelerate with hardware developments later in the year.

(For an overview of Microsoft’s recent financial performance, see the chart “Financials for the Last Five Quarters“.)

PC Sales Slow Business, Windows Divisions

Microsoft reports its financial results and gives financial guidance to investors in five divisions. (For a chart detailing the results of each division, see “Revenue and Profit (Loss) by Business Segment“.)

Windows Outpaces PC Market

The Windows and Windows Live division is responsible for the Windows client OSs, Windows Live services and software (such as the Hotmail consumer e-mail service), and hardware products such as Surface devices. The division saw revenue increase 24% from the same quarter last year to US$5.88 billion, with operating income of US$3.30 billion, up 14%.