Earnings: Microsoft’s Profits and Revs Up; Online Losses Increase

imageMicrosoft (NSDQ: MSFT) has announced its Q308 earnings, and its revenues and profits are up for the quarter. Revenues came in at $15.06 billion, a 9 percent increase over the year-ago quarter. Net income was $4.37 billion, up slightly from $4.29 billion in the year-ago quarter. The company is also downward revising its estimates for next year in keeping with the economic environment, especially for the second half of 2009. And the pitch this quarter from MSFT: we can help you save money. “Our customers are asking how they can save money and do more with less…Microsoft is uniquely positioned to help our customers save money through supplier consolidation, increased productivity, and a low total cost of ownership through the depth and breadth of our product portfolio and solutions.” Yes, funny.

Division wide: In its Entertainment and Devices Division (EDD), which includes Xbox and Zune, revenues came in at $1.81 billion, down from $1.93 billion in the year-ago quarter. Operating income for the division was $178 million, up from $167 million in the year-ago quarter. In its Online Services Business (OSB) unit, which includes MSN and other online advertising services, revenues came in at $770 million, up from $671 million in the year-ago quarter. Operating losses for the division widened significantly, to $480 million, from $267 million.

More after the jump

From its 10-Q, just filed with SEC, some details on M&A costs and divisional numbers: OSB revenues grew as a result of increased online advertising revenue and incremental aQuantive revenue, partially offset by decreased access revenue. Online advertising revenues increased $72 million or 15 percent, to $557 million. Agency revenue, which is solely derived from aQuantive, was $98 million for the quarter, up from $51 million for the year-ago quarter. Its dying ISP revenues decreased $20 million or 29 percent, to $50 million, reflecting continued migration of subscribers to broadband.

For EDD: Revenues fell primarily due to decreased Xbox platform and PC game revenues, partially offset by increases across other EDD product revenue. Xbox 360 platform and PC game revenue decreased $331 million or 22 percent, primarily as a result of the $330 million of incremental revenue from the launch of Halo 3 in Q307 and decreased revenue per Xbox 360 console as a result of price reductions during the past 12 months. It shipped 2.2 million Xbox 360 consoles during Q308, compared with 1.8 million consoles during Q307. Other EDD product revenue increased $216 million or 51 percent, led by increased sales of application software for Apple (NSDQ: AAPL) computers, the Zune digital music and entertainment platform, and mobile and embedded device platforms.

On M&A: “We acquired four entities during the three months ended Sept. 30, 2008, for total consideration of $385 million. As a result of these acquisitions, we recorded $312 million of goodwill.”

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