Revenues at Microsoft jumped a cool $3 billion over this time last year, lifted mostly by the take up of Vista, but also by a 148% increase of sales of gaming software and hardware, including Xbox 360 and the Halo 3 game. The company shipped 1.8 million Xbox 360 consoles compared to half that in the first quarter and Halo 3 generated $330 million during its launch.
Overall Microsoft revenues were $13.7 billion for the quarter with net income a massive $4.3 billion, over $3.5 billion this time last year, a rise of almost 23% and the business threw off $5.8 billion in cash. Microsoft can more than afford the potential of up to $2.1 billion that it now says the European Commission could exact from it in the final settlement of its anti-trust case, if it includes all of the back payments at full cost, now that the matter is settled.
Microsoft still has to resolve a number of legal issues with its partner, Alcatel Lucent, which includes the appeal on the dispute over MP3 patents, which initially went against Microsoft to the tune of $1.3 billion, which was then reversed, but also the dispute over 7 patents involved in its Mediaroom (IPTV) software. These will reach court in 2008 and 2009.
The entire Entertainment and Devices division was lifted by the success of Halo 3, in the quarter, and the division brought in revenues of $1.9 billion, compared to $1 billion a year ago, and a profit of $134 million. Although Microsoft says it now believes that positive revenue trend will continue throughout this financial year with increased sales of Xbox 360 consoles, related games, accessories, and sales of Zune products, we think it would be fairly optimistic for the division to remain profitable during that time.
Microsoft said it expected revenue to be between $15.6 billion and $16.1 billion for the coming quarter and between $58.8 billion to $59.7 billion for the entire year.