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Microsoft Keeps Raking in Profits

Microsoft Corp. released its third quarter earnings at the close of business Thursday, showing profits of $2.72 billion on revenues of $7.25 billion for the quarter that ended March 31. Strong Windows XP sales were a key driver, according to Microsoft chief financial officer John Connors.

"We delivered another quarter of solid revenue growth and operating results that exceeded our expectations. Desktop platform sales have been excellent on the strength of Windows XP –- both in the enterprise and in the home," Connors said in a statement.

On the strength of Windows XP, desktop platforms revenue grew 11 percent, with pricier business versions of Windows accounting for 47 percent of all operating systems sold this quarter, Microsoft said. That's up from business operating systems accounting for 35 percent of OS sales in the year-ago quarter.

"This quarter Windows XP shipped on nearly 60 percent of all new PCs, which represents a faster penetration than any of our previous operating systems," Jim Allchin, group vice president of the platforms division at Microsoft, said in a statement.

Microsoft contributed to its earnings by driving down costs and improving efficiency throughout the organization during the quarter, Connors said.

Microsoft's expectations for the next quarter, which ends June 30, are for revenues around $7 billion and operating income around $3 billion. The company's fiscal year ends on that date as well, and Microsoft currently expects to show revenues of about $32 billion, with operating income of around $13.5 billion.

"While we look forward to slightly improved PC growth rates for the next quarter, our expectations for enterprise IT spending levels continue to be quite modest," Connors said.

About the Author

Scott Bekker is editor in chief of Redmond Channel Partner magazine.