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Microsoft (Nasdaq: MSFT) has released its earnings report for the three months ending March 31st. Revenue came in at $14.40 billion for the quarter, a year-on-year increase of 32 percent. This saw operating income increase 69 percent to $6.59 billion and net income increase 65 percent to $4.93 billion.
Online Services: Advertising revenue was up 23 percent, which was partially offset by a decline in access revenue. There are 285 million active Hotmail accounts and 278 million Messenger accounts. The segment showed 11 percent year-on-year growth to $620 million, but was flat sequentially. The segment showed a loss of $200 million, up from a loss of $24 million for Q1 2006.
Entertainment and devices: There were over 500,000 Xbox 360 consoles sold, bringing the total to 11 million. Retailers sold more than 500K Xbox’s reducing inventory levels to “more around normal levels”, to quote Chris Liddell, CFO. Revenues fell by 21 percent year-on-year to $929 million. The segment made a loss of $315 million, down from a loss of $402 million for the first quarter 2006. Liddell also answered a question about the impact of Halo 3: “In terms of Halo 3, that is clearly going to have a positive impact in two senses. One, it gives us more confidence with the number of consoles that we think we are going to be able to sell next year. In terms of a direct impact, obviously it is a third-party product, so it is reasonably profitable from our point of view. It will be several hundreds of millions of dollars in revenue next year.”
Mobile and Embedded Devices: Revenue growth was in excess of 30 percent. The quarter saw the release of Windows Mobile 6, and Microsoft expects to see an increasing number of Windows Mobile 6 powered devices coming to market through the rest of this year…well, it is a new product.