Microsoft sales top predictions

MICROSOFT, the world’s largest software maker, reported first-quarter sales that topped analysts’ predictions as companies invested in Office and server software, outweighing poor demand for computers.

Sales rose 7.3% to $17.4 billion, (€12.62bn)compared with Bloomberg’s $17.2bn estimate. Net income in the period that ended in September rose 6.1% to $5.74bn, or 68 cents a share, from $5.41bn, or 62c, a year earlier, Redmond, Washington-based Microsoft said in a statement today, beating the 68c Bloomberg estimate.

Corporate customers are buying Office software as well as Windows and database software for their networks. Microsoft is also benefiting from the revenue that comes from multiyear contracts sold to businesses.

“They’re smoking with their corporate signings,” said Colin Gillis, an analyst at BGC Partners LP in New York. “The corporate products held up great last quarter, but is that going to last for another four quarters? Probably not.”

Microsoft said operating expenses in the year that started July 1 will rise to $28.6bn to $29.2bn, above the $28bn to $28.6bn it forecast in April.

Unearned revenue, a measure of future sales, was $15.7bn, above the $15.5bn Bloomberg estimate.

Microsoft was little changed in extended trading after the release. It decreased 9c to close at $27.04 in New York. The shares have declined 3.1% this year.

Total PC shipments rose less than forecast in the third quarter, dragged down by disappointing back-to-school sales, a sluggish economy and a shift to tablets and smartphones, according to Gartner Inc. Shipments climbed 3.2%, below the 5.1% growth that had been projected.

A total of 91.8 million PCs were shipped in the period. Apple sold 11.1 million iPads at the same time, setting a record for the product.

Microsoft is rushing to complete a new version of Windows capable of running smaller tablet with battery life to rival that of the iPad.