Microsoft (MSFT) had spectacular earnings driven by sales of its new Vista OS and its server software. The world’s largest software company did recognize some revenue from coupons sold for Vista upgrades in 2006, but revenue in the operating unit that includes Vista rose 58% to $5.2 billion.
Sales in the Microsoft server division rose 15% to $2.7 billion. And sales in the division that includes the new Office 2007 rose 34% to $4.83 billion.
Microsoft was not the only winner here, not by a long shot. The PC industry has been desperate to have a catalyst to increase unit sales, especially in the US where growth has been a tepid 10%. While Hewlett-Packard’s (HPQ) PC operations should be helped, it has a cushion with its big printer operation. It is Dell (DELL) that should be giving thanks as the sun comes up this morning. It moribund growth could actually be reignited by the demand for new PCs that Vista sales should drive. Microsoft’s forecasts for sales for the balance of the calendar year were unusually strong.
Bill Gates will also get flowers from AMD (AMD) and Intel (INTC). Their core server and PC chip businesses have been flagging and anything that drives customers to upgrade hardware with their chips is essential to their prospects for the balance of 2007.
When Microsoft CEO Steve Ballmer made downbeat comments about Vista sales in February, the chip, server and PC industries fell into a deep depression.That has been lifted now.
Douglas A. McIntyre can be reached at [email protected]. He does not own securities in companies that he writes about.
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