Microsoft earnings jump on PC sales rebound

By Jessica Mintz, Associated Press

SEATTLE — Microsoft said Thursday its earnings in the most recent quarter jumped 60%, helped by a rebound in personal computer sales.
The PC industry bounced back during the 2009 holiday shopping season after one of its roughest years to date. Microsoft's earnings are closely tied to computer sales because its two most profitable divisions make the Windows operating system and the Office programs and other business software.

For the fiscal second quarter, which ended Dec. 31, Microsoft (MSFT) said its net income rose to $6.7 billion, or 74 cents a share, from $4.17 billion, or 47 cents a share, in the same period last year.

The latest version of Windows, called Windows 7, was released in October, but in the months before the launch Microsoft gave new PC buyers the right to upgrade to Windows 7 later. The second-quarter results included $1.7 billion in deferred revenue for Windows sales made during earlier quarters but not recorded until the launch.

That added 14 cents to the software maker's net income. Excluding the gain, Microsoft said it earned 60 cents a share in the quarter, one cent more than analysts polled by Thomson Reuters were expecting.

Revenue increased 14% to $19 billion from $16.6 billion in the year-ago quarter.

Excluding the deferred Windows revenue, the total was $17.3 billion, slightly less than the $17.8 billion Wall Street was expecting.

In the Windows division, revenue leapt 70% and net income nearly doubled to $5.4 billion.

Microsoft's business software division, however, posted almost flat sales and net income. Microsoft is expected to release a new version of Office this year, which could account for the lack of growth. The company also faces increasing competition from Google Inc.'s Web-based word processing, spreadsheet and other software.

Shares of Microsoft rose about 1% in extended trading after the release of results. Earlier, shares closed down 51 cents, or 1.7%, at $29.16.

http://www.usatoday.com/tech/techinvest ... soft_N.htm