Microsoft’s quarterly profits up despite declining PC revenues

Microsoft has published strong quarterly results, with profits up 31 per cent compared to 2010 at $5.23bn.

Overall revenues for Microsoft's third quarter were $16.43bn, up 13 per cent, which was higher than some analysts had anticipated. The company said it expects between three to five per cent growth over the next year.

"We delivered strong financial results despite a mixed PC environment, which demonstrates the strength and breadth of our businesses," said Peter Klein, chief financial officer at Microsoft.

"Consumers are purchasing Office 2010, Xbox and Kinect at tremendous rates, and businesses of all sizes are purchasing Microsoft platforms and applications."

Sales in the core operating system segment were down four per cent, and this is part of a persistent trend in Microsoft's results. Windows 7 may be selling well, but the erosion in Microsoft's central business was one of the reasons Microsoft's shares were down at the end of trading today.

Microsoft's entertainment and devices division had the strongest quarter, growing 60 per cent on the back of strong sales of the Kinect and Xbox. The business division, which handles Office, grew 21 per cent, with servers up 11 per cent.

Bing search revenue grew 14 per cent on the quarter, and Microsoft reported that its US market share is up by the same amount.

"We delivered strong third-quarter revenue from our business customers, driven by outstanding performance from Windows Server, SQL database, SharePoint, Exchange, Lync and increasingly our cloud services," said Kevin Turner, chief operating officer at Microsoft.

"Office had another huge quarter, again exceeding everyone's expectations, and the addition of Office 365 will make our cloud productivity solutions even more compelling. We continue to see strong adoption of our cloud-based services among the Fortune 500."