REDMOND (dpa-AFX) - Microsoft Corp. (MSFT) said Thursday after the markets closed that its fourth quarter profit rose 30% from last year, helped by strong sales of its servers, Office 2010 and Xbox 360 video game consoles as well as lower income tax expenses. The company's quarterly earnings per share also came in above analysts' expectations as did its quarterly revenue. However, revenue for the company's windows and windows live division fell for the third straight quarter, reflecting weak PC trend.
The world's largest software company reported net income for the fourth quarter of $5.9 billion or $0.69 per share, compared to $4.5 billion or $0.51 per share for the year-ago quarter.
On average, 27 analysts polled by Thomson Reuters expected the company to earn $0.58 per share for the fourth quarter. Analysts' estimates typically exclude special items.
The company's effective tax rate for the fourth quarter was 7%, compared to 25% in the prior year quarter. 'Our effective tax rate was lower than the U.S. federal statutory rate primarily due to a higher mix of earnings taxed at lower rates in foreign jurisdictions,' the company said.
Operating income for the fourth quarter grew 4% to $6.2 billion from $5.9 billion in the fourth quarter of last year.
Redmond, Washington-based Microsoft said revenue for the fourth quarter rose 8% to $17.37 billion from $16.04 billion in the same quarter last year, driven by strong growth at its entertainment and devices division. Twenty-four analysts had a consensus revenue estimate of $17.25 billion for the fourth quarter.
Microsoft's two major divisions make the Windows operating system and Office business software. About 90% of the PCs around the world run on the company's windows operating system.
Microsoft's business division revenue increased 7% year-over year to $5.77 billion in the fourth quarter, mainly reflecting sales of the 2010 Office system that was launched during the fourth quarter of the company's previous fiscal year.
Last month, the company released Office 365 with familiar Microsoft Office collaboration and productivity tools delivered through the cloud.
However, revenue from the company's windows and windows live division fell 1% to $4.74 billion in the fourth quarter from $4.78 billion a year ago, in line with the PC trend. This is the third consecutive quarter that the division's revenue has slipped from the previous year. Windows 7 remains the fastest selling operating system in history with 400 million licenses sold.
Worldwide PC shipments grew a lower than expected 2.3% to 85.2 million units in the second quarter of 2011, according to preliminary results released by market research firm Gartner Inc. (IT) last week.
Microsoft estimates that sales of PCs to businesses grew about 8% this quarter and sales of PCs to consumers declined about 2%. The decline in consumer PC sales included an about 41% decline in the sales of netbooks. The arrival of Apple Inc.'s (AAPL) iPad and other tablet PCs has apparently hurt netbook sales.
During the quarter, Microsoft unveiled a preview of the next version of Windows, codenamed Windows 8, featuring a new user interface and application experience.
Server and tools division's revenue grew 12% to $4.64 billion in the fourth quarter from $4.15 billion in the fourth quarter of last year. The division's offerings include Windows Server, Microsoft SQL Server and Windows Azure.
Fourth quarter revenue from the company's entertainment and devices division jumped 30% to $1.49 billion from $1.14 billion last year, reflecting higher Xbox 360 platform revenue. Xbox 360 platform revenue for the quarter rose 29%, led by higher Xbox LIVE revenue and increased volumes of Xbox 360 consoles sold. The company shipped 1.7 million Xbox 360 consoles during the fourth quarter, up 13% from a year earlier.
Online services division revenue rose 17% year-over-year to $662 million in the fourth quarter, mainly due to search revenue growth. Bing's US search share increased 340 basis points to 14.4% during the quarter.
In May, Microsoft entered into a definitive agreement to buy internet communications company Skype Technologies SA for $8.5 billion in cash from an investor group led by Silver Lake. The acquisition is expected to give Microsoft a boost in the enterprise collaboration market as Skype's voice, video and sharing capabilities would enable Microsoft to better compete against rivals like Cisco Inc. (CSCO) and Google Inc. (GOOG).
Microsoft on Thursday reaffirmed its fiscal 2012 operating expense guidance of 3% to 5% growth from 2011, or $28.0 billion to $28.6 billion.
The company stopped making specific profit or revenue forecasts in January 2009, citing market volatility.
Microsoft' shares, which have traded in a range of $23.32 to $29.46 over the past year, closed Thursday's regular trading session at $27.09, up 3 cents. The stock is currently losing 19 cents in after hours trading.
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