New Windows OS brightens Microsoft

Published on Friday 23 July 2010 15:58

Software giant Microsoft has posted a sharp rise in quarterly profits amid signs of a rebound in technology spending by corporate customers.

Revenues hit $16 billion (10.5bn) in the second quarter, up 22 per cent, as profits jumped 48 per cent to a thumping $4.5bn.

The results, which were better than Wall Street had expected, were helped by strong sales of Office 2010 as revenues from the company's business software segment rose 15 per cent to $5.3bn.

Microsoft said that more than 175 million licences for Windows 7 had been sold since its launch last year.

It said there were signs that its corporate customers were starting to spend again after billings for its multi-year agreements with big companies increased in the quarter.

Colin Gillis, an analyst at BGC Partners, said: "It's a great quarter - but does that matter? We all knew the business refresh cycle was in place.

"This is the dilemma for Microsoft - how do they get the stock moving again?"

While the group has followed chipmaker Intel and iPhone-maker Apple in pleasing investors with its second-quarter figures, there was no such reaction for online retailer Amazon after its earnings figure came in below expectations.

Revenues were in line with hopes after growth of 41 per cent to $6.6bn, but this was offset by a 40 per cent rise in operating expenses as Amazon earned $207 million, an increase of 45 per cent.

The revenue growth came mainly from sales of electronics and other general merchandise, which increased 69 per cent from last year, to $3.5bn. Revenues from books, CDs, DVDs and other media lifted 18 per cent to $2.9bn.

Amazon did not provide details of sales of its Kindle e-reader, which is now the subject of competition from Apple's iPad.

However it emerged this week that Amazon is selling more Kindle books in the US than hardback books. Five authors - Charlaine Harris, Stieg Larsson, Stephenie Meyer, James Patterson, and Nora Roberts - have each sold more than 500,000 Kindle books.