Microsoft results hint at IT spending recovery

Microsoft’s latest financials showed evidence that enterprise IT spending is gathering steam, as the vendor claims it is reaping the benefits of broad hardware refreshes.

For the fourth consecutive quarter, the US software giant’s results were fuelled by storming sales of operating system Windows 7, which was released in late 2009. Sales of Windows and its related products to consumers and businesses soared 66% year-on-year to $4.79 billion.

During the three-month period ending 30 September 2010, overall revenues at the Redmond, Washington-based company were up 25% to $16.2 billion. Net income gained 51% to $5.1 billion.

Sales derived from the vendor’s business unit, which sells Microsoft Office and Microsoft Dynamics ERP software, increased 14% to $5.13 billion. Its server and tools business saw its sales rise 12% to $3.96 billion.

The company said its recently launched Azure cloud computing platform had benefited from "strong subscription growth" during the quarter. As Microsoft does not break out sales figures for specific products, however, it is difficult to judge exactly how much cash Azure is earning Microsoft.

"With the depth and breadth of our offerings, we are well positioned to grow our share of the IT spending market," said CFO Peter Klein. "We expect business PC and server hardware purchasing to remain the high priority for most businesses. The business PC refresh cycle should continue through at least the remainder of this fiscal year."

Microsoft’s business divisions were pummelled during the recession of 2008/09. During the depths of the economic downturn, the company was regularly reporting double-digit sales contractions across these units.

Peter Done

Peter Done is managing director of Peninsula Business Services, the personnel and employment law consultancy he set up having already built a successful betting shop business.

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