Microsoft said the diversity of its software offerings helped it beat Wall Street estimates and post $15.06 billion in revenue during its fiscal first quarter of 2009.
Analysts surveyed by Thomson Reuters expected profit of 47 cents per share on $14.8 billion in revenue. Microsoft posted 48 cents per share.
Despite the numbers, Microsoft only posted a modest 1.9 per cent increase in net income as compared to the same quarter a year ago. In the fiscal first quarter of 2008, revenue was $4.2 billion as compared to $4.3 billion in 2009.
Microsoft said its annuity sales, which are built mostly on multi-year software maintenance contracts, grew by more than 20 per cent fuelled by growth in the client, business and server and tools divisions.
Microsoft's success came mostly before the economic downturn that has had financial markets in a panic recently.
But the quarter was not without turmoil for Microsoft. During the quarter, Microsoft dropped its bid to acquire Yahoo while pursuing Google in the search and advertising market. Microsoft is investing heavily to make up ground on the search giant but the depth of those efforts from a financial perspective won't be reflected until later in the fiscal year.
Microsoft was active in the quarter adding to its server and tools lineup the much-anticipated Windows Server 2008 Hyper-V virtualization platform and the SQL Server 2008 database.
Spending drop
But Chris Liddell, chief financial officer for Microsoft, said the company did feel a spending drop off in the last few weeks of the quarter and that the trend continued into October.
Liddell said Microsoft would adjust downward its guidance for the second fiscal quarter of 2009. Microsoft had been predicting an uptick in the economy for the quarter.
Now, Liddell said, "we are assuming a mild recession and a relatively modest growth rate for IT based products."
He said the company's strong cash flow, high unearned revenue and plentiful cash on hand would "allow us to weather any economic recession in relatively better terms than most."
And adding a high note, Liddell said Microsoft still foresees an "increase in demand for our products that will grow revenue from single digits to low double digits this financial year."
He predicted that growth would be judged as an exceptional performance in the current economic environment.
On the balance sheet, IT showed that it was still a driving force for Microsoft. Revenue in the server and tools business was up 17% from $2.9 billion in the fiscal first quarter on 2008 to $3.4 billion in the same quarter this year.
Microsoft's complete balance sheet in available on its website.
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(AP)
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