Microsoft profits bounce back

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Healthy sales of Windows 7 and the Office 2010 suite have pushed Microsoft’s profits up by 48 per cent to $4.52 billion in the last fiscal quarter.

The results come against the backdrop of profits posted by Intel and Apple and serve as proof that the recovery in the technology sector is well under way.

Microsoft’s sales revenue for Q4 2010 checked in at $16.04 billion, showing a 22 per cent improvement on last year.

In a prepared statement, Kevin Turner, Microsoft chief operations officer, stated, “We saw strong sales execution across all of our businesses, particularly in the enterprise with Windows 7 and Office 2010. We look forward to continuing our product momentum this fall with the upcoming launches of Windows Phone 7 and Xbox Kinect."

Not to detract from Microsoft’s soaring results, it has to be borne in mind that the last generation of Windows’ products had less than stellar sales. Windows Vista was not received well and Office 2007 sales did not live up to Microsoft’s expectations. This meant that many corporates skipped these releases and are now hungry for company wide refreshes.

While Microsoft’s $16.04 billion revenue for the quarter is heartening for the company, its online venture showed a loss of $696 million. The company puts this down to reimbursement costs paid to Yahoo, greater online traffic acquisition costs, and research and development.

The next quarter will probably show continued growth for these core products but the company will be hoping that its forthcoming smartphone operating system, Windows Phone 7, adds to the bottom line.

This is a gamble for Microsoft because, as chief executive Steve Ballmer admitted recently, the company has skipped a generation of phone development.

The smartphone forerunner, Windows Mobile, was overshadowed by Apple’s iPhone, Nokia’s Symbian-based phones and RIM’s Blackberry. Phone 7 has to step out of the shadows and then has a hill to climb to get back on terms.

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