Office Boosts Growth Despite PC Decline

Despite continued revenue declines from its Windows and Windows Live products, robust consumer sales of Office, Xbox products, and business demand for server and tools products brought Microsoft US$16.4 billion in revenue in the third quarter (ended Mar. 31, 2011) of its 2011 fiscal year, representing a 13% increase from last year’s third quarter. Net income also increased year-over-year, from US$4.01 billion to US$5.23 billion. Microsoft’s corporate customers continue to expand buying on long-term (annuity) contracts, ensuring a future revenue stream for the company’s enterprise products. In the Online division, the Microsoft and Yahoo search agreement has generated less revenue than expected, and the companies have delayed expansion outside of the United States and Canada. This could mean that the consumer online business will continue to slow overall earnings.

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