Microsoft beats estimates thanks to Xbox and Windows

Microsoft just reported their First-Quarter finanacial results and it’s looking pretty. According to the report Windows and Xbox exceed expectations due to strong consumer demand, although sales slipped 14% from a year ago Redmond managed to beat streets estimates and post earnings per share of $3.57 billion, or 40 cents per share, on revenue of $12.92 billion. Stock is currently saoring 11% in pre-market trades. Also note that Microsoft defered revenues from Windows 7 sales this quarter (Win7 licenses sold through the free Vista upgrade program). Revenue would only have declined by 4% if those sales were counted.

These financial results reflect the deferral of $1.47 billion of revenue, an impact of $0.12 of diluted earnings per share, relating to the Windows 7 Upgrade Option program and sales of Windows 7 to OEMs and retailers before general availability. Adding back the deferred revenue, revenue totaled $14.39 billion, a 4% year-over-year decline, and EPS totaled $0.52 per share, an increase of 8% over the same period of the prior year.

“We are very pleased with our performance this quarter and particularly by the strong consumer demand for Windows,” said Chris Liddell, chief financial officer at Microsoft. “We also maintained our cost discipline, which allowed us to drive strong earnings performance despite continued tough overall economic conditions.”

Windows 7 and Windows Server 2008 R2 launched globally on Oct. 22 as anticipated. Also during October, Microsoft released Microsoft Exchange Server 2010 to manufacturing and in July announced a strategic partnership with Yahoo! Inc. to provide search results for their global properties.

“The worldwide launches of Windows 7, Exchange Server 2010 and Windows Server 2008 R2 are exciting milestones for Microsoft, our partners, and customers,” said Kevin Turner, chief operating officer at Microsoft. “We are pleased by the early positive response we are receiving for these products.”

microsoft Q1 2010

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Source: Microsoft