Microsoft earnings fall despite Windows 8 boost

Microsoft's profits dipped during the three months to the end of last year, even though it reported a solid start for its new Windows 8 operating system.

Net income for the period, the company's second quarter for the 2013 fiscal year, came in at $6.38bn, down from $6.6bn in the same quarter during the previous year. The dip came even as sales in its entertainment and devices arm, which includes the Xbox video games console, held up well. Overall, revenues in that division were down 11 per cent on the previous year. Sales of its Office software also slowed, which was expected ahead of the launch of a newer version.

The quarter was the first to include sales of the newest avatar of the company's operating system – and revenues in the Windows business were up a healthy 24 per cent. Late last year, the company made a foray into the world of tablets with its Surface device.

"Our big, bold ambition to re-imagine 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," Microsoft chief Steve Ballmer said.

Overall revenues were higher, rising by around 3 per cent to $21.5bn, in line with what market analysts had predicted.

The company said it had so far sold more than 60 million licences for Windows 8, which while strong was not enough to spark enthusiasm among some analysts. "Windows 8 continues to have an uphill battle in convincing investors this is going to be the key to the growth story for Microsoft," Daniel Ives, an analyst with FBR Capital Markets, told Reuters as the company's share dipped in after-hours trading.