Microsoft Reports 5.5% Profit Rise in Q2, Misses Revenue Forecasts

Strategic Insights -

Microsoft's second-quarter profit rose 5.5% to $3.65 billion, driven by sales of new server software and a 9.4% increase in overall sales to $11.8 billion. However, the company missed its revenue forecast after Xbox 360 sales fell short, with only 1.5 million units shipped in the quarter. The shortage was caused by a failure to secure Xbox components, leading to a sell-out of the console just days after its release in the United States.

Key Takeaways:

  • Microsoft's net income advanced to $3.65 billion, or 34 cents a share, from $3.46 billion, or 32 cents, in the same quarter last year.
  • Sales gained 9.4% to $11.8 billion, missing the company's forecast of $11.9 billion to $12 billion.
  • The company shipped 1.5 million Xbox machines in the quarter, with sales limited by a shortage of components.
  • Microsoft pinned its hopes on holiday sales of the Xbox to bolster revenue and win market share from Sony's PlayStation.
  • Revenue this quarter will be $10.9 billion to $11.2 billion, and per-share earnings will be 32 cents to 33 cents.
  • Microsoft's sales may pick up in coming quarters with the release of Windows Vista, which will have new features like a built-in search engine and photo organization.

Statistics:

  • Microsoft's net income rose 5.5% to $3.65 billion in Q2.
  • Sales increased 9.4% to $11.8 billion in Q2.
  • The company shipped 1.5 million Xbox machines in the quarter.
  • Revenue this quarter will be $10.9 billion to $11.2 billion.
  • Per-share earnings will be 32 cents to 33 cents.
  • Global PC shipments rose 17% in the quarter, according to IDC.

Sources:

  • Microsoft press release (date not specified)
  • Friedman, Billings, Ramsey (no date specified)
  • Thomson Financial (no date specified)
  • IDC (no date specified)
  • Microsoft's quarterly earnings report (date not specified)