October 27, 2007 – (HOSTSEARCH.COM) – Strong quarterly sales have spurred an increase in Microsoft profits over the same period last year, a number of reports suggested recently. The increase appears to have been driven by better than expected sales of Windows Vista and Microsoft Office 2007. The company’s net profit of $4.29 billion was a 23% percent increase on the previous year. The news drove up the price of Microsoft shares, which increased nearly 12% in after hours trading, and continued to rise in regular trading. Shares closed at $32.01 – an increase of 76 cents.
According to Chris Liddell, Microsoft’s Chief Financial Officer, three factors influenced the company’s better than expected performance. PC sales increases of around 15% played a part, as did a “higher mix” of premium-priced versions of Windows and Office, and increased anti-piracy efforts. Microsoft’s server software sales also rose 16% on the quarter to $2.9 billion. In addition, sales of its much-anticipated video game Halo 3 saw the company’s entertainment and devices group report a pretax profit of $165 million – and increase of $23 million on the same period last year.
Microsoft’s profits counter suggestions that its software model is outmoded in the face of “cloud computing” and online services. The company’s recent purchase of online advertising agency aQuantive Inc. alongside initiatives such as Office Live Workspaces suggests they may also be make inroads in this area. Chief Executive Steven Ballmer has predicted that 25% of Microsoft income would come from online advertising in the shorter-term future. Currently, the company’s online services unit generates around 5% of the company’s income.
