Posted by: kurtsh | April 29, 2011

INFO: Microsoft’s Q3 FY11 Earnings… next to other years

Some of you know I track our quarterly & annual earnings.  I even shared a sanitized version of my spreadsheet one year I think.

Here’s a snapshot of Microsoft REVENUE (i.e. money generated) year-over-year in Q3 FY11:

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As you can see, there really hasn’t been much of a dip in overall sales of Windows.  Business division revenue (Office & Dynamics) burst out of the gate to lead all divisions due to Office 2010 purchases and what I assume is the long awaited upgrade availability of Dynamics CRM 2011.  Server & Tools continues to chug along consistently as expected and while Entertainment & Devices continues to grow with the market acceptance of Xbox 360 & Kinect, Online Services revenue is actually up (but barely relative to the other divisions) relative to last year with Bing’s marketshare growth.

Here’s a snapshot of Microsoft INCOME (i.e. profit) year-over-year in Q3 FY11:

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This is obviously a little more interesting because it take into account expenditures.  Contrary to what’s being said in the media, Windows didn’t so much as lose sales as much as its operating costs increased (marketing, development, etc.) likely to sustain mindshare & momentum through to Q4.  Meanwhile Business division’s increases in revenue translated directly to increases in profit.  Server & Tools continues to grow consistently alongside revenue growth just as Entertainment & Devices does. 

Online Services however has a BIG sucking sound coming from it in the Operating Income department.  This of course is because of the massive operating costs associated with Microsoft’s datacenters & our bet on cloud services such as Office 365 & Windows Azure.  Until Office 365 is released or we finish building the datacenters out (Microsoft owns 4 of the 10 largest datacenters in the world), I don’t anticipate this getting better but it’s all strategic investment in an area of technology that as a company, we are betting the farm on, possibly more so than any other initiative we have at Microsoft.


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