Microsoft Earnings And Revenue Climb, Still No CEO Announcement

Jan 23, 2014

In the face of a steadily declining market for personal computers, Microsoft succeeded in boosting both revenue and profit in the most recent quarter, coming in ahead of analyst estimates. 

Sales climbed 14 percent to $24.5 billion in the quarter ended Dec. 31, and net income rose 2.8 percent to $6.6 billion, or 78 cents a share. The consensus estimate of analysts was 69 cents a share, according to Bloomberg. 

But the company is still mum about a replacement for chief executive officer Steve Ballmer, who said last August that he planned to retire. A search committee that includes chairman Bill Gates has been looking for the past five months for the right person to become Microsoft's third-ever CEO.

Microsoft said revenue from its Surface tablet computer, which competes with Apple's iPad, more than doubled to $893 million from $400 million in the quarter that ended in September. Morningstar analyst Norman Young says the company sold more Surface tablets than he expected, though he thinks some of that came from cutting prices. 

"Now that we're out of the holiday season, and I suspect now that we've mostly cleared out the older inventory of the cheaper, older Surface Pros and Surface tablets, will they be able to maintain this momentum?" Young said.

Xbox One

Overall, revenue in Microsoft's Devices and Consumer division, which includes the Xbox game console, climbed 13 percent to almost $12 billion. A week before Thanksgiving, gamers stood in line to be among the first to buy the new Xbox One. The company sold almost 4 million of the consoles before the year ended. 

"It's been seven or eight years since they've refreshed that product, so a lot of core gamers wanted to get their hands on that product," said Brad Reback, an analyst with the research firm Stifel Nicolaus. 

Microsoft has been trying to better compete with tech giants like Apple and Google by shifting to mobile devices like smart phones and tablets as consumers do more of their computing on handheld devices instead of PCs. Gartner said earlier this month that worldwide PC shipments fell 6.9 percent in the December quarter, the seventh consecutive quarter of decline.