Microsoft Corp.’s quarterly profit jumped 30% as businesses snapped up copies of its Office applications and other products, in a sign that the company’s position among large corporate customers remains secure.
But sales of Microsoft’s Windows operating system declined 1%, indicating continued weakness for one of the pillars of the software company’s business as Apple Inc.’s iPad ate away at sales of inexpensive consumer laptops.
Overall, Microsoft reported net income of $5.9 billion in its fiscal fourth quarter, up from $4.5 billion a year earlier. Revenue rose 8% to $17.37 billion.
Gregg Moskowitz, an analyst at Cowen & Co., described the quarter as “solid, not spectacular,” taking note especially of a big increase in Microsoft’s “unearned revenue”—a category that reflects long-term contracts for software and services purchased by big corporate customers. That category of revenue increased to more than $17 billion, roughly $1 billion more than Mr. Moskowitz was expecting for the quarter.
“You will see a good backlog of business,” Microsoft Chief Financial Officer Peter Klein said in an interview.
The increase indicates that Microsoft has, for now, stared down threats from Google Inc. and other rivals to its lucrative business of serving corporate information-technology departments.
Another sign of that was the performance of its business division—the group responsible for Office—which saw a 7% revenue jump to $5.78 billion for the quarter. Microsoft released a new version of the application suite, Office 2010, last year at a time when the product was facing growing competition from a free online alternative from Google called Google Apps. “Their status within the enterprise, broadly speaking, remains quite strong,” Mr. Moskowitz said.
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