Windows-8 shore up Revenues for Microsoft- AAPL, GOOG
Northern, WI 1/26/2013 (GDPwatch) –Due to excessive advertising funding in marketing its Windows OS, Microsoft Corp. (NASDAQ:MSFT) had to settle for less profit even though revenue was higher.
Net profits for the second quarter went down 3.7% to $6.38 billion which works out to 76 cents per share. On the other hand, sales revenue went up 2.7% to $21.46 billion. This was in line with analysts’ figure of 74 cents per share.
Microsoft Corp. (NASDAQ:MSFT) is heavily spending funds to counter the threat of Apple Inc. (NASDAQ:AAPL) and Google Inc. (NASDAQ:GOOG) The latter companies are steadily eroding Microsoft Corp. (NASDAQ:MSFT)’s market as consumers have started preferring mobile and handheld devices to PCs. Microsoft Corp. (NASDAQ:MSFT) has yet to make a substantial move in the hardware and technology arena.
Microsoft Corp. (NASDAQ:MSFT) spent around $4.31 billion or 15% in the second quarter on marketing of its Windows 8 OS and Surface tablet. Even the R&D expenses went up 6.6% to $2.53 billion. Yesterday, the share dropped by 1.4% to $27.23, and the stock has gone down by 10% in the last quarter of 2012.
Many upgraded to Windows 8
To stop losing more customers, Microsoft Corp. (NASDAQ:MSFT) launched Windows 8 and the Surface tablet on Oct. 26. Despite a drop in PC sales, industries were reportedly upgrading OS software for their computers. Some businesses are even upgrading from Windows XP which is almost 12 years old.
Sales figures for the Windows division went up by 24% to $5.88 billion. Many companies enter into long-term contracts, termed as deferred revenue earnings, which translate into $19.8 billion worth of future sales.
CFO Peter Klein said that this increase in sales was mainly due to tablet sales, upgrades, multiple windows licenses by businesses. But he declined to comment on a sales figure for the Surface tablets.
Last quarter was disappointing for Windows
It is the first time in 5 years that global PC sales went down by 6.4% in the last quarter.
According to Josh Olson, an analyst at Edward Jones & Co., people did not have much expectation from Windows and this was not a good omen.
Even the last 4 weeks have seen Microsoft Corp. (NASDAQ:MSFT) sales and earnings dip by an estimated 2.4%.
Corporate moving from Windows XP to newer version of Windows
Due to Microsoft Corp. (NASDAQ:MSFT)’s announcement that it was stopping any further support to Windows XP, consumers, including corporate, are hastily upgrading their OS and server editions. The company has also begun marketing the latest version of Office.
Even after such a long time after the launch of Windows XP, there is an astonishing amount of PCs that still run this OS. Now they will have to upgrade which will most likely see PC sales go up too.
Support and sales of Windows 7 still continue as this version has been tried and tested and consumers are more comfortable with it.
Microsoft Corp. (NASDAQ:MSFT) shares were up by 0.90% to $27.88. Apple Inc. (NASDAQ:AAPL) shares were down by 2.36% to $439.88. Google Inc. (NASDAQ:GOOG) shares were down by 0.02% to $753.67.