Microsoft beat Wall Street expectations for both revenue and earnings per share (ESP) for its fiscal 2008 second quarter, attributing its strong quarter to sales of core client products such as Windows Vista and Office 2007, as well as Exchange and SharePoint server software.
For the quarter ended Dec. 31, Microsoft reported revenue of US$16.37 billion, an increase of 30 percent year over year and a number that solidly beat the $15.95 billion in revenue that Thomson Financial analysts had estimated. Last year for the same period, Microsoft reported $12.54 billion in revenue.
Microsoft's year-over-year percentage growth is higher than normal due to a deferral of $1.64 billion in revenue and operating income, as well as $0.11 of diluted earnings per share from the second to the third quarter of fiscal 2007.
This deferred revenue contributed to the higher-than-average second-quarter percentage growth. Without these deferrals, second-quarter growth rates for revenue, operating income and earnings per share would be 15 percent, 27 percent and 32 percent, respectively, for the quarter reported Thursday.
Ahead of Microsoft's announcement, analysts had expected the company to report a strong quarter even among economic uncertainty and fears that the U.S. economy is entering a recession.
Microsoft's client business, on sales of Windows Vista, was especially strong in the quarter, with $4.34 billion in revenue compared to $2.59 billion in revenue a year ago. According to Microsoft, its client business has grown 20 percent on average since Windows Vista was made available nearly a year ago, and the company believes Vista began hitting its stride for adoption among customers and partners in the second quarter. According to Microsoft, it has sold more than 100 million licences for Vista.