Microsoft Q2 Earnings Up as Windows, Enterprise Sales Rise

Microsoft announced quarterly earnings of $21.46 billion for the second quarter of its fiscal year 2013, with Windows sales leading the way.

Microsoft announced fiscal 2013 quarterly revenue of $21.46 billion for the quarter ended Dec. 31, 2012.

Operating income, net income and diluted earnings per share for the quarter were $7.77 billion, $6.38 billion and $0.76 per share, led by a boost in Windows sales and overall enterprise business, the company said.

However, net income was off for the quarter. Microsoft posted net income of $6.38 billion for its second fiscal quarter of 2013, where it posted $6.62 billion for the same period in FY 2012.

The Windows division posted revenue of $5.88 billion, a 24 percent increase from the prior year period. Microsoft said it has sold more than 60 million Windows 8 licenses to date. Windows was Microsoft's biggest revenue generator for the quarter, surpassing the Microsoft Business Division at $5.69 billion and the Server & Tools unit at $5.19 billion.

This quarter marks the first that the new Windows 8 operating system has entered the market. The new operating system, which is intended to "reimagine" and enliven the Windows platform with touch capability and a host of other new features, hit the market on Oct. 26, giving the software giant more than two months of sales of the new OS.

"Our big, bold ambition to reimagine Windows as well as launch Surface and Windows Phone 8 has sparked growing enthusiasm with our customers and unprecedented opportunity and creativity with our partners and developers," Steve Ballmer, Microsoft's CEO, said in a statement. "With new Windows devices, including Surface Pro, and the new Office on the horizon, we'll continue to drive excitement for the Windows ecosystem and deliver our software through devices and services people love and businesses need."

Also during the quarter, Microsoft released its Surface RT tablet computer, which was well-received at opening day events at the company's stores around the country. However, indications are that Surface sales have been lukewarm. Its newest Surface tablet model, the Surface Windows 8 Pro, will be available for purchase on Feb. 9, 2013, in the United States and Canada at all Microsoft retail stores,, Staples and Best Buy in the U.S., as well as from a number of locations in Canada.

"I'd call Microsoft's results disappointing but not particularly surprising," said Charles King, principal analyst at Pund-IT. "There's been chatter for a couple of weeks about weak sales of Windows 8-based PCs and laptops during the holidays."

A drop in sales often occurs just before a company refreshs a major product, and both Office and Xbox appeared to suffer such a falloff, said King.

"The most disturbing thing about the call was the company's decision not to provide details about Surface sales," he said. "That would be a bad sign in any case but is doubly so when it pertains to a product designed to establish Microsoft as a name player in the hot tablet market.”

Industry analyst Rob Enderle of the Enderle Group advised to take a wait and see approach on Microsoft's Windows 8 progress.