If you were to read tech headlines and guess Microsoft’s net worth, you might be inclined to think it was $0.
Just about every tech headline these days seems to paint Microsoft in a bad light. Over the past year, we’ve seen headlines like:
-“Xbox One spies on users and will require always-on internet connection”
-“PC sales worsen for tenth straight quarter”
-“Users confused by Windows 8 and Windows RT tablets
-Manufacturers switching back to Windows 7 because Windows 8 sucks
-Etc., etc., etc.
But if you ignore all the sensationalist headlines, then you’ll find that Microsoft is actually doing pretty well. Earlier today, the company posted record revenues of $24.5 billion, reporting net income of $6.56 billion or 78 cents per share.
That’s 2.8% growth from this point one year ago and a 14.3% increase in revenue.
The financial data beat analysts earning. Most analysts predicted income of around 68 cents per share on an estimated revenue of $23.4 billion for the holiday quarter.
Why Microsoft beat expectations
Microsoft’s biggest winner was the Xbox One, which overcame some early difficulties and negative press to create $4.7 billion of revenue. Microsoft sold 7.4 million Xbox consoles in total, including 3.9 million Xbox Ones and 3.5 million Xbox 360s.
Surprisingly, another major source of growth was the Microsoft Surface tablet. The Surface doubled its revenue from $400 million to $893 million in just a single year.
Finally, Bing also saw growth. Bing now holds approximately an 18.2% share of the search market and saw its advertising sales climb 34%. Other areas of growth included Windows OEM Pro revenue, which grew 12%, and Microsoft Commercial Licensing, which grew 8% to $10.1 billion.
Why Microsoft could have done better
It wasn’t all good news at Microsoft. Some company divisions came in firmly beneath expectations. For example, Devices and Consumer Licensing (Windows software revenue) saw its revenue drop 3% to $5.38 billion. Office Consumer revenue also dropped 24% because users switched to Office 365 instead of buying new software.
Ultimately, Microsoft is in good shape. In a tech industry where we’ve been bombarded with anti-Microsoft news for months upon months, it’s good to see Microsoft beat expectations.
Ballmer’s last earnings report
This earnings report was historic for a few reasons. First, it was Microsoft’s highest revenue ever. And second, it was Steve Ballmer’s last earnings report. Ballmer will be stepping down from Microsoft at some point over the upcoming months – or whenever the company gets around to naming a new CEO.
If you’re a fan of Microsoft, then this is obviously good news. If you thought the company was going away anytime soon, then I’ve got some bad news for you.