Microsoft posts record sales of $20 billion -- thanks Kinect

[nanibabu]

NEW YORK (CNNMoney) -- Microsoft's booming holiday season led the company to record quarterly sales, which easily trumped Wall Street's forecasts, the software giant announced Thursday.

The Redmond, Wash., company said its fiscal second-quarter net income fell incrementally to $6.6 billion. But that still translated to an all-time earnings high of 77 cents per share, because the company has reduced its pool of outstanding shares since last year. Analysts polled by Thomson Reuters had forecasted earnings of 68 cents per share.

7Email Print Sales rose 5% to $20 billion, trouncing analysts' forecasts of $19.1 billion.

"We are enthusiastic about the consumer response to our holiday lineup of products, including the launch of Kinect," Peter Klein, Microsoft's chief financial officer, said in a prepared statement.

Helping drive the strong sales was a 55% growth in revenue for the company's entertainment & devices division, which includes the Xbox 360 and Kinect devices. Microsoft said it sold 8 million Kinect controllerless Xbox attachments in two months of sales, "far exceeding"


Also included in that entertainment & devices unit is Microsoft's new smartphone entry, Windows Phone 7. The company announced Wednesday that it has shipped 2 million Windows Phone 7 devices in 30 countries in the three months since the operating system launched.

Though that's nothing to sneeze at, it's a far cry from its competition: AT&T (T, Fortune 500) said Thursday that it activated 4 million iPhones in the United States alone last quarter, and Google (GOOG, Fortune 500) confirmed last week that its carrier partners are activating 300,000 Android devices each day.

Most other Microsoft units also made out nicely last quarter.

Windows 7 is selling well, and the company said it is now on 20% of Internet-connected PCs. That still leaves a sizeable chunk of the PCs on the market without Microsoft's latest operating system. But that would seem to confirm the company's long-held mantra that Windows will continue to be a strong source of revenue in the future, as consumers and businesses slowly but steadily upgrade their PCs from Windows XP or Vista.

Still, Bing continues to be a sore spot for the company. Microsoft's online services division, which includes Bing, lost $543 million in the quarter and $1.1 billion in the past six months. Despite steady share gains in search and the completion of a partnership agreement with Yahoo (YHOO, Fortune 500), Microsoft still has yet to turn a profit in that unit.

[robo]

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