Microsoft Nets a Profit as Turnaround Takes Shape

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Microsoft chief Steve Ballmer may be heading out the door in the next year, but he certainly doesn’t have a case of Senioritis. He’s aiming to finish out strong as the company moves to refocus its efforts on devices and services—an increasingly crowded space where the company will face Apple, Samsung and others head-on.  

And it’s been a rough road so far. The company has endured backlash over its new tile-like Windows design, and its Surface tablets have underperformed. With better hopes for its mobile business, the company acquired Nokia’s devices division last month, but how the two companies will meld their operations and offerings is still unclear. In desperate need of a pick-me-up, the company posted a profitable first quarter.

The company reported revenues of $5.24 billion, up from the $4.47 billion it earned at the same point last year, as sales climbed 16 percent to $18.5 billion. The boost is mostly built on the demand for corporate software such as SQL database server, SharePoint, Exchange for e-mail, and Lync for corporate messaging and telephony. While not as ‘sexy’ as say, the iPad Air, they pay the bills.[more]

That’s $700 million more than analysts on average had expected from the company, Bloomberg notes.

“Our devices and services transformation is progressing and we are launching a wide range of compelling products and experiences this fall for both business and consumers,” Ballmer said in the earnings statement. “Our new commercial services will help us continue to outgrow the enterprise market, and we are seeing lots of consumer excitement for Xbox One, Surface 2 and Surface Pro 2, and the full spectrum of Windows 8.1 and Windows Phone devices.”

Microsoft is predicting an even stronger second quarter, especially since the new Xbox One will roll out just in time for holiday shopping. Existing game consoles netted $1.45 billion in the quarter, while Surface tablets alone brought it $400 million, selling more than twice the amount this quarter than it did in the past fourth quarter.  

Microsoft will continue to put its weight behind selling more mobile phones and tablets in what is a very crowded and competitive field. The just-launched Surface 2 will be up against the brand new iPad offerings—and even a tablet from its soon-to-be sister, Nokia—not to mention Samsung’s breadth of mobile offerings. It, too, saw an uptick, pulling in 25 percent more this quarter than in the same period last year.

Microsoft may still be the gold standard in the corporate world, but it no doubt has a long road ahead of it to establish itself as a leader in consumer electronics. 

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