Microsoft (MSFT) Overpowers Earnings Forecast Helped By Server Numbers, Shares Soar

Microsoft (NASDAQ:MSFT) posted EPS for its fiscal first quarter of  $.40 compared with $.48 last year. The company has revenue $12.92 billion. Both numbers were well ahead of Wall St. forecasts of  $.32 a share on revenues of $12.4 billion. The revenue figure was off 14% for the three months ending September 30.

Microsoft deferred $1.47 billion, or $.14 a share for sales of Windows 7

Sales at the company’s large Windows division fell from $4.3 billion last year to $2.6 billion in the most recent period. Operating income for the unit dropped from $3.1 billion to $1.5 billion.

Microsoft’s servers and tool divisions did extraordinarily well with revenue flat at $3.4 billion and operating income up from $1 billion to $1.3 billion. The business division also held up given the effects of the recession. Sales dropped from $5 billion to $4.4 billion. Operating income was down to $2.9 billion from $3.2 billion.

Games and entertainment, the Xbox operations, posted flat sales of $1.9 billion. Operating income nearly doubled to $312 million. Microsoft’s online operation, including MSN, posted a revenue decline from $520 million to $490 million. The operation lost $480 million compared to $321 million last year.

Microsoft is reducing operating expense guidance to $26.2 billion to $26.5 billion, for the full year ending June 30, 2010.

Douglas A. McIntyre