Office Helps Results as PC Sales Slow

Strong sales of Office 2010 and Xbox products brought Microsoft US$19.95 billion in revenue in the second quarter (ended Dec. 31, 2010) of its 2011 fiscal year, a 5% increase from last year’s second quarter, and led Microsoft to revise some of its revenue forecasts upward for the rest of the year. However, net income fell year-over-year, from US$6.66 billion to US$6.63 billion, due to slower PC sales and higher sales of less-profitable products. Nonetheless, Microsoft’s corporate customers continue to expand buying on long-term contracts, locking in a future revenue stream for the company’s business products.

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

Slower PC Growth, Office Shines

Microsoft’s most profitable products continue to be the Windows PC OS and the Office suite. The Windows division saw at best limited growth compared to the previous year, while Office sales accelerated. Office results and a successful quarter for Xbox products led Microsoft to raise some of its estimates for the rest of fiscal 2011.