Microsoft posted some strong sales of its Xbox videogame consoles and Surface tablet computers over the Holiday season, which helped to drive quarterly revenue and earnings higher than Wall Street expectations. As a result, company shares rose about 4 percent in after-hours trading recently.
Selling more software, greater success with hardware. The company’s numbers reflected its ability to sell more software to companies and find success with hardware like its new Xbox One. The company’s CFO Amy Hood recently stated in an interview that the company “feels good about the results in this quarter.” It saw improvements in areas where it needed to get better.
Doubling of Surface sales. These areas of improvements included a doubling of Surface sales from the previous quarter to $893 million. The tablet computer got off to a relatively slow start during its first 15 months, but Microsoft was posted two strong quarters of strong revenue and unit growth. The company did not release specific sales figures for these devices, and it loses money on Surface, which came out with fresh versions in October.
Executives were tightlipped about Nokia Corp.’s mobile-phone business, which posted a significant drop in revenue. Microsoft is buying its mobile phone business to give it a boost in the four percent market share for its Windows Phone smartphones.
A new CEO. Until February, the company’s financial performance had been overshadowed by its search for a new CEO. Steve Ballmer had announced his plans to retire in August. New CEO Satya Nadella has investors waiting to see how Microsoft will move forward, and whether, among other things, it will boost cash returns to stockholders, shed unpromising businesses or rethink how Microsoft will attack areas of weakness within the company, such as mobile devices. Certainly, the new CEO’s strategy will be a big part of the story going forward.
For the fiscal period second quarter ended December 31, Microsoft’s revenue rose by 14 percent to $24.52 billion. Net income increased to $6.56 billion, or 78 cents a share. One year ago, it was $6.38 billion or 76 cents a share.