Microsoft first quarter revenues fall on Windows and Office sales decline

By Graeme Burton
19 Oct 2012 View Comments
Microsoft chief executive Steve Ballmer

Software giant Microsoft has posted first quarter fiscal revenues down 7.9 per cent to $16bn (£10bn), from $17.372bn (£10.8bn) achieved in the same period a year earlier.

The company claimed that the results partly reflected a decline in PC sales, as well as the deferral of $1.36bn (£850bn) in advanced sales of the forthcoming Windows 8 operating system, due for release 26 October, and a related upgrade offer for Microsoft Office.

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Broken down by division, the Windows & Windows Live Division, which includes PC operating systems, related software and online services, and PC hardware products, posted a sharp fall in revenues of 33.4 per cent, from $4.874bn (£3.03bn) to $3.244bn (£2.02bn).

The Microsoft Business Division, meanwhile, which includes Microsoft Office and Dynamics customer relationship management software, saw revenues decline by a smaller amount, by 2.4 per cent to $5.5bn (£3.42bn).

In the Entertainment and Devices Division, a marginal decline in revenue to $1.946bn (£1.21bn) masked a 26 per cent decline in sales of the flagship Xbox console, with unit shipments dropping from 2.3 million to 1.7 million, year-on-year. The Xbox forms part of Microsoft's entry in the "battle for the living room" and is a fully internet connected entertainment device.

Server & Tools, though, which includes server operating systems and the SQL Server database, as well as software development tools, became the second-largest division in Microsoft as it posted an increase in sales of 8 per cent to $4.552bn (£2.83bn).

The disappointing results follow on from fourth-quarter and full-year results to the end of June 2012, in which the company posted its first-ever quarterly loss due to the write-down on the disastrous $6bn (£3.74bn) acquisition of online advertising company aQuantive.

CEO Steve Ballmer, though, has suggested that the company is in the process of re-orienting towards devices and services, as reflected by the imminent release of the Microsoft Surface tablet computer, as well as smartphones based on the Windows Phone 8 operating system.

The front-end to the company's forthcoming series of operating systems is intended to provide a unified "look and feel" between various different devices, although it has not yet taken off on smartphone devices after more than a year on the market. 

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