Microsoft 3Q Earnings Beat Estimates, Revenue Misses

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Microsoft beat earnings expectations for the third fiscal quarter, but missed revenue projections for the period ended March 31.

The company earned $6.06 billion, or 72 cents per diluted share, on sales of $20.49 billion. In the year-ago period, the company earned $5.11 billion, or 60 cents per diluted share, on $17.41 billion in revenue.

Analysts had projected earnings of 68 cents per share on sales of $20.56 billion.


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Microsoft CEO Steve Ballmer said the company's growth was due in part to bets on cloud services that are starting to pay off.

"People increasingly choose Microsoft services including Office 365, Windows Azure, Xbox LIVE, and Skype," Ballmer said in a statement. "While there is still work to do, we are optimistic that the bets we've made on Windows devices position us well for the long term."

Meanwhile, Microsoft CFO Peter Klein plans to leave the company at the end of the current quarter after four years on the job, the company said. Microsoft did not provide a reason for Klein's departure but said it expected to name a replacement from within its own financial leadership team within the next several weeks.

"It has been a pleasure to work with Peter as CFO," Ballmer said in a statement. "He's been a key member of my leadership team and a strategic advisor to me, and I wish him the very best."

Breaking down Microsoft's financial performance by group, the Microsoft Business Division reported $6.32 billion in sales, 8 percent higher than the year-ago quarter. Excluding the recognition of revenue related to Office Upgrade Offer and pre-sales, the division's revenue increased 5 percent.

The Server & Tools business saw sales increased 11 percent to $5.04 billion, driven largely by double-digit growth in SQL Server and System Center, according to Microsoft.

"Our enterprise business continues to thrive," said Kevin Turner, chief operating officer at Microsoft, in a statement. "Enterprise customers are increasingly turning to Microsoft for their IT solutions and as a result, we continue to take share from our competitors in key areas including hybrid cloud, data platform, and virtualization."

Microsoft's Windows Division posted sales of $5.70 billion, a 23 percent year-over-year increase, but were flat excluding the recognition of revenue related to the Windows Upgrade Offer

During the first quarter, Microsoft released its Surface Windows 8 Pro tablet, but didn't offer any sales figures for the device.

Online Services reported an 18-percent increase in sales to $832 billion, while the Entertainment and Devices Division jumped 56 percent to $2.53 billion.

NEXT: Looking Forward

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