Microsoft Earnings On Target As PC Business Still Stagnant

The PC business is not the most dynamic place to be these days, but fortunately for Microsoft (NSDQ: MSFT) it has a growing presence in the gaming and entertainment markets to offset slow growth in the PC market. Microsoft met expectations for profit and exceeded them for revenue as a slight decline in revenue from Windows was offset by gains in from Xbox, Office, and its business software division.

Revenue for the quarter was $17.37 billion, up seven percent from the same period last year and better than consensus estimates of $17.25 billion as polled by *Yahoo* Finance. That number marks an all-time high for the company during this particular period of the year. Net income was $5.74 billion or $0.68 in earnings per share, exactly matching analyst estimates for earnings. Microsoft improved its earnings per share by 10 percent compared to last year, it said in its earnings release.

Windows and Windows Live brought in $4.87 billion to the company, up two percent from last year and tracking the overall growth of the PC market, Microsoft said. That’s been the state of the business that put Microsoft on the map for several quarters, and it’s hard to see it changing too much in the future although Intel’s numbers earlier in the week had some thinking that Microsoft might also receive a boost.

The Business Division, led by Microsoft Office, recorded $5.62 billion in revenue during the period, an eight percent jump. Server and Tools recorded $4.25 billion in revenue, a 10 percent improvement over the prior year.

Entertainment and Devices, led by the Xbox, did $1.96 billion in revenue compared to $1.79 billion a year ago. Microsoft again declined to provide any shipment totals for Windows Phone devices, which fall into that category and have not really gotten much traction in the first year they have been on the market.

And the company continues to lose piles of money competing with Google (NSDQ: GOOG) on the Internet, although the picture improved slightly during the quarter. Online Services recorded $625 million in revenue but lost $494 million, both numbers slight improvements over the prior year but still difficult to swallow. Microsoft thinks the investment is worth it, however, if it helps keep Google on its toes.

The company will hold a conference call later in the afternoon to discuss its results.