Earnings: Microsoft Dead? Hardly
Microsoft's (NASDAQ:MSFT) Q3 2013 earnings results reveal a key trend: The software company's product diversity (especially in the server and cloud markets) is helping Microsoft to survive the PC market implosion, and continued challenges in the mobile, tablet and smartphone markets. Bottom line: It sounds like Office 365, Windows Azure and SQL Server have momentum, while CEO Steve Ballmer concedes the company still has "work to do" in the Windows device market.
The latter item might be the under statement of the decade. But Microsoft shares rose in after-hours trading because investors believe Microsoft is holding up pretty well amid slowing PC sales.
Among the quarterly highlights:
- Microsoft Business Division revenue rose 8 percent to $6.32 billion of revenue, suggesting Office continues to throw off some serious cash for the company.
- Server & Tools revenues rose 11 percent to $5.04 billion of revenue, thanks to double-digit percentage revenue growth in SQL Server and System Center, the company said.
- Windows division revenues rose 23 percent to $5.70 billion, but the company did not discuss specific Surface RT or Surface Pro sales figures in the earnings release. The VAR Guy will be listening to an earnings call to see if more details emerge.
- Online Services revenue rose 18 percent to $832 million
- Entertainment and Devices revenue rose 56 percent to $2.53 billion, and Xbox LIVE now has over 46 million members worldwide, up 18% from last year at this time.
- Also, Microsoft CFO Peter Klein intends to leave the company after Q4 2013 and a new CFO will be named in a few weeks.
Generally speaking, it sounds like Microsoft is upbeat about its overall business but conceding the mobile, tablet and smartphone efforts need work. How much work? Perhaps more details will surface on an earnings call this evening. The VAR Guy will be listening in.