This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Microsoft Reports Growth Across all Sectors

Microsoft story updated with analyst comments

NEW YORK (TheStreet) -- Microsoft (MSFT) beat first-quarter earnings estimates by a wide margin Thursday afternoon, boosted by strong sales of its Windows 7 operating system, Office 2010 and Xbox 360.

Profit rose to 62 cents per share, up from 41 cents a year ago. Analysts had predicted Microsoft would post a profit of 55 cents a share.

Microsoft

First-quarter revenue increased 25% to $16.2 billion. Analysts had expected revenue of $15.8 billion.

Shares rose 1.83% to $26.76 in morning trading Friday.

Microsoft's strong earnings allayed concerns about weakness in the global PC market driven by softened consumer demand. Gartner recently lowered its third quarter estimates of worldwide PC shipments -- widely regarded as a sign of health in the sector -- from 12.7% to 7.6%.

While some analysts downgraded Microsoft this month on worries that tablets like the iPad would hurt business by eating away at PC sales, a "material" shift has not taken place, said Microsoft's general manager of investor relations, Bill Koefoed, during an earnings call with analysts.

Overall PC sales rose between 9% and 11% this quarter, with business PCs up about 15%, Koefoed said.

Microsoft expects strength on corporate purchases of information technology through the end of the fiscal year, Microsoft Chief Financial Officer Peter Klein said.

The corporate refresh cycle -- upgrading to Windows 7 by installing the software or getting it preloaded on new PCs -- contributed heavily to this uptick in IT spend. While the normal refresh cycle would have kicked in during the middle of the recession, companies delayed significant IT purchases until now.

The average age of a work PC is four to five years, suggesting demand for new machines will be strong, said Richard Williams, an analyst at Cross Research.

Microsoft's Windows & Windows 7 division increased revenue 10% over the same period last year, not including expenses related to the rollout of Windows 7.

Microsoft sold more than 240 million licenses for its Windows 7 operating system in its first year, becoming the fastest selling and most popular operating system in history.

Microsoft's Business Division, which includes its Office 2010 software, grew 14% over last year.

The company's Entertainment & Devices division grew 27% year-over-year to $1.8 billion, thanks to strong Xbox 360 game and console sales. Microsoft's Halo Reach the newest addition to the Halo franchise for the Xbox, hit $200 million in sales on the first day of its availability.

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 16,493.37 -69.93 -0.42%
S&P 500 1,925.15 -5.52 -0.29%
NASDAQ 4,352.6390 -17.1340 -0.39%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs