Microsoft Earnings Reflect Rise in Demand for Tablets

Microsoft’s bottom line took a hit in the fourth quarter of 2012, but the company gained in core areas, according to the financial results that the software maker disclosed yesterday.

Microsoft’s net income dropped nearly four percent to $6.38 billion, or 76 a shares, from the $6.62 billion or 78 cents it delivered a year ago. The company cited lowered demand for its enterprise solutions and entrainment products as the cause of the decline.

Total revenue for the quarter ended December 31, 2011 was $21.5 billion. Microsoft’s Windows business grew 24 percent and accounted for $5.88 billion in that period, while the Server & Tools group raked in $5.19 million – 9 percent more than in the fourth quarter of 2011.  The firm’s services income swelled 10 percent to $869 million.

“Our big, bold ambition to reimagine Windows as well as launch Surface and Windows Phone 8 has sparked growing enthusiasm with our customers and unprecedented opportunity and creativity with our partners and developers,” said Steve Ballmer, chief executive officer at Microsoft.  He added that “with the launch of SQL Server 2012 and Windows Server 2012, we continue to see healthy growth in our data platform and infrastructure businesses and win share from our competitors.”

Microsoft said it shipped 40 million Windows 8 licenses in November, but the successful launch of the new operating did not have too big of an impact on the company’s scrawny mobile business.  Market research firm Chitika says that Surface generated only 0.13 percent of total tablet growth, a figure that could very well decline in light of Google’s recent actions.

Earlier this month, the search giant announced that it will cut support for ActiveSync on the 30th. To add insult to injury Google also blocked Microsoft from using the YouTube APIs in a native Windows Phone client app that has already been built.

For more analysis on Microsoft Windows 8 and its impact on the software maker’s fiscal standing, see Contributing Editor John Casaretto, who appeared on this morning’s NewsDesk segment with Kristin Feledy.