Microsoft Posts £4bn Profit But Windows 8 Revenues Are Flat

Steve McCaskill is editor of TechWeekEurope and ChannelBiz. He joined as a reporter in 2011 and covers all areas of IT, with a particular interest in telecommunications, mobile and networking, along with sports technology.

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Microsoft makes gains in gaming and servers, but CFO Peter Klein is to step down

Microsoft increased profit by 17 percent to $6.06 billion (£3.94bn) during the third quarter of its 2013 financial year, but will be concerned at generating virtually no revenue from Windows 8 after adjusting for the Windows Upgrade Offer.

The company launched Windows 8 last October, but its release has failed to increase demand in a slumping PC market and has even been blamed by some for making sales worse. Fortunately for Microsoft, the blow has been softened by gains in video games and servers.

“The bold bets we made on cloud services are paying off as people increasingly choose Microsoft services including Office 365, Windows Azure, Xbox Live and Skype,” said Steve Ballmer, chief executive officer at Microsoft. “While there is still work to do, we are optimistic that the bets we’ve made on Windows devices position us well for the long-term.”

Windows 8 woes

Ballmer fistMicrosoft Business Division posted $6.32 billion in revenues (£4.118bn), an 8 percent year on year increase, its Server and Tools division reported $5.04 (£3.28bn) billion of revenue, an 11 percent increase fuelled by double digit growth in SQL Server and System Center.

Revenues at the Entertainment and Devices Division more than doubled to $2.53 billion (£1.65bn), partly thanks to more subscribers using the Xbox Live online gaming service.

“Our enterprise business continues to thrive,” said Kevin Turner, chief operating officer at Microsoft. “Enterprise customers are increasingly turning to Microsoft for their IT solutions and as a result, we continue to take share from our competitors in key areas including hybrid cloud, data platform, and virtualization.”

CFO departure

Microsoft also announced that Peter Klein, its chief financial officer (CFO), will leave the company at the end of the current fiscal year after nearly four years in the role and 11 years at the company. A new CFO will be named from the Microsoft finance leadership in the coming weeks.

“It has been a pleasure to work with Peter as CFO,” said Ballmer. “He’s been a key member of my leadership team and a strategic advisor to me, and I wish him the very best.”

“I’ve had a great experience as CFO and overall in my time at Microsoft,” said Klein “We have an incredibly strong finance organisation, and I’m looking forward to working with my successor on the transition through the end of the fiscal year.”

Last November, Windows president Steven Sinofsky announced he would leave the company, just weeks after the launch of Windows 8. There have been a number of executive departures in recent years, leading to accusations that Ballmer has played a role in forcing them out.

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Originally published on eWeek.

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