Financial News

  • 27 January 2014, 12:52

Microsoft Gets Xbox One And Surface Boost

Global software giant Microsoft has reported better-than-expected results for the fourth quarter - on the back of booming Xbox One game consoles and tablet sales.

It made a profit of 3.94bn in the three months to the end of December, up nearly 3% on same period in 2012.

The Washington-based company sold 3.9 million Xbox One consoles to retailers and doubled revenue from its line of Surface tablets, compared to the third quarter.

Revenue rose in the fourth quarter by 14% to $24.52bn (14.76bn).

The firm has also had a solid 12 months on the stock market, with its share price rising around 30% over the previous year.

Outgoing CEO Steve Ballmer said its devices and consumer segment had a "great holiday quarter."

Surface tablet revenue rose to $893m (537m) in the quarter, up 123% from Q3.

The company benefited from a US summer price cut to its first-generation models, unveiled the Surface 2 and expanded the number of places it is sold at retail.

"There's better hardware, the software continues to improve and there's better market perception," Microsoft's general manager of investor relations Chris Suh said.

However, analysts continue to question the company's new focus on manufacturing hardware on top of its mainstay software business.

The Surface division still need to reach manufacturing scale that would make it profitable and knock Apple off its iPad perch.

And the Xbox One, which launched late last year to rival Sony's PlayStation 4, is yet to maximise returns from game sales.

Market watchers are also concerned about the company's purchase in the current quarter of struggling Finnish firm Nokia's phone segment, in a deal valued around 4.7bn.

On Thursday, Nokia revealed that its smartphone sales plummeted 29% in the December quarter, even though it released new Lumia models.

Microsoft has also continued to weather to storm of declining PC sales, once its main revenue source.

PC sales between October and December are estimated to have fallen globally by 6.5%, but Microsoft said revenue from its flagship operating system fell just 3%.

However it did not give figures for the split between Windows 7 or its troubled Windows 8.1 operating system.

Overall, revenue from its devices and consumer segment grew 13% to $11.91bn (7.18bn), while business service revenue from server and cloud computing grew 10% to $12.67bn (7.64bn).

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