Microsoft Hits the Jackpot with 60 Percent Profit Increase

Jan. 28, 2010

Hurray! Technology got some welcome news as Microsoft scored a Q2 breakthrough in its 2010 profit picture following its downturn a year earlier. Profit jumped 60 percent.

The company’s results stemmed largely from sales of Windows 7. Microsoft attracted shoppers in droves and increased PC sales using the software.

The numbers: Microsoft achieved $8.5 billion in operating income. Online services were not profitable but $5.4 billion in earnings came from Windows and Windows Live.

Q2 profit increased to $.66 billion or 74 cents a share from $4.17 billion or 47 cents a share the year before. This is from revenue that jumped 14 percent – from $16.63 billion to $19.02 billion.

Consumer demand is heartening news. It’s the best operating system launch in the company’s history. However, Microsoft warned that business has not begun spending.

An interesting side angle: Inexpensive notebooks now comprise 11 percent of the PC market, and 90 percent of which have Windows installed. That means Microsoft is dodging a financial bullet because the low-priced netbooks constitute a lower revenue stream for the software maker.

Weak spots for Microsoft: Office sales were about flat, and online services (think Bing) decreased $581 million or 5 percent. But Bing’s market share of searches increased to 10.7 percent compared to 8.3 percent last year.

The proposed advertising merger with Yahoo is expected later in 2010.

Go Microsoft! Microsoft’s success not only bodes well for the tech sector. Microsoft, as a major employer, is a symbol of hope in the Puget Sound area of Washington state. The state is trying to solve a deficit while suffering from high unemployment.

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Seattle business consultant Terry Corbell provides high-performance management services and strategies.