Microsoft’s record income of $19.95 million for its second fiscal quarter of 2011 was higher than analysts’ estimates, thanks to strong holidays sales of Kinect video-game devices and robust interest in Office business productivity software.
But profits fell to $6.63 billion from $6.66 billion in the same quarter last year, in part because revenue from the company’s signature product, its Windows operating system, fell nearly 30 percent. The decline shows a slowdown after a boost from the July launch of Windows 7, and the company acknowledged that the burgeoning tablet market took a toll on sales of PCs that run Windows.
Profits from Windows fell to $3.3 billion from $5.4 billion in the same quarter last year. Microsoft said a total of 300 million licenses for Windows 7 have been sold, making up 20 percent of the PC operating-system market.
The company said Office 2010 is the fastest-selling consumer version of Office in history, 50 percent higher than Office 2007 at the same period after launch.
Big Win in Gaming
Revenue from Microsoft’s Entertainment and Devices division grew 55 percent with the success of the Kinect motion sensor driving sales of the Xbox 360 gaming platform as well as games and subscriptions to Xbox Live.
“We are enthusiastic about the consumer response to our holiday lineup of products, including the launch of Kinect,” said Peter Klein, Microsoft’s chief financial officer. “The eight million units of Kinect sensors sold in just 60 days far exceeded our expectations. The pace of business spending, combined with strong consumer demand, led to another quarter of operating-margin expansion and solid earnings-per-share growth.”
But the decline in Windows is noteworthy as analysts study the effects of the tablet revolution. Klein said in a conference call with analysts Thursday that tablets “created a bit of a drag on the consumer side,” according to…