Microsoft sees surge in profits

Microsoft saw fourth-quarterly profit jump 30 per cent as businesses took up copies of the latest iteration of Office software and its Xbox console.

The results were released alongside full-year results that exceeded analyst expectations. Sales reached $17.4bn (£10.6bn) in fiscal quarter ending June 2011, surpassing the $17.2bn average estimate of analysts. Profit for the period was $6.2bn.

However, the firm continued to make losses in its online services division, which includes the Bing search engine. It lost $66m in fourth-quarter 2010, although this marks an improvement on the $120m loss the division made in the same period a year ago.

The firm's attempts to push cloud computing, part of the same division, are continuing to necessitate huge investment.

Microsoft's Windows division also saw a fall, with revenue dropping one per cent year on year to $4.7bn – profits fell four per cent to $2.9bn. This is despite PC sales rising by nearly two per cent.

It was the second consecutive quarter in which Windows revenues and profits declined on a yearly basis.

"Like its archrival Apple, Microsoft appears to be making plenty of money from the sale of consumer entertainment and tech devices, resulting in a 45 per cent revenue increase for the company's entertainment and devices division over the year," said Richard Edwards, principal analyst at research firm Ovum.

"However, there was no mention of Windows Phone 7 in the Microsoft earnings press release, and so one doubts if Microsoft will ever catch iPhone and Android in the mobile phone market."

He added that with technical support for Windows XP due to end in less than three years, businesses will soon have to make their move and upgrade to Windows 7 - or Windows 8 when it ships in 2012 - and this should give Microsoft and its service partners an added boost in the months ahead.

"Microsoft has exceeded analyst expectations and looks to have gained some momentum over the last 12 months: Steve Ballmer will be hoping this impetus can be sustained as the company places big bets on cloud, mobile, and of course Windows," concluded Edwards.