Microsoft’s quarterly profit rises 17% to $5.2 bn

Microsoft Corp has reported a 17-per cent year-on-year increase in its net profit for the quarter ended 30 September 2013, at $5.24 billion, and diluted earnings per share of $0.62 per share.

Total revenue for the quarter stood at $18.53 billion, up 7 per cent from the year-ago quarter, while gross margin and operating income for the quarter were $13.42 billion and $6.33 billion.

Microsoft said progress in its transition from a software firm to a ''devices and services'' company has helped it raise quarterly profit to 17 per cent from a year ago quarter.

Revenue from search advertising grew 47 per cent during the quarter ended 30 September 2013 on the back of an increase in both unit value and volume expansion.

Revenue from devices and consumer products grew 4 per cent to $7.46 billion. Windows OEM revenue declined 7 per cent while Windows Pro revenue grew for the second consecutive quarter. Surface revenue grew to $400 million with sequential growth in revenue and units sold over the prior quarter.

Commercial revenue grew 10 per cent to $11.20 billion.

SQL server revenue grew in double-digits, with SQL server premium revenue growing more than 30 per cent, Microsoft said.

''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,'' chief executive Steve Ballmer said on Thursday.

In the company's first fiscal quarter, the profit translated to 63 cents a share, better than expected, and revenues were also ahead of forecasts, up seven per cent at $18.6 billion.

Ballmer said Microsoft was ''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.''

The company recently upgraded its Surface tablets, after taking an embarrassing $900 million write-down earlier this year due to weak sales.

Microsoft, which is struggling to adapt to mobile computing, dominated by Apple and Google software platforms, said Windows revenues fell 7 per cent in the quarter despite gains in ''Windows Pro'' software.

The company did not provide detailed sales figures for Surface, which, analysts say, has had little impact in the fast-growing tablet market.

Microsoft, which announced the acquisition of the handset division of Finland's Nokia to boost its efforts in smart phones, however, said the strategic alliance may have an adverse effect on its business.

Although Microsoft has the ability to protect its intellectual property rights, claims that the company has infringed the intellectual property rights of others, the possibility of unauthorised disclosure of significant portions of Microsoft's source code, cyber-attacks and security vulnerabilities in Microsoft products could reduce revenue or lead to liability, the company said.

Regulatory uncertainties from operating a global business and catastrophic events or geo-political conditions may also disrupt business, Microsoft said.

Microsoft shares leapt 5.6 per cent in after-hours trade to $35.60 on the stronger-than-expected results.

Microsoft is now in the midst of a major transition, seeking to catch up in mobile computing as it searches for a new CEO to replace departing Ballmer.