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Microsoft Earnings Hold Some Good News for Partners

Microsoft reported their earnings late last week after our last RCPU of the week went out. Since it's World Series time, we'll go with the baseball analogy -- Microsoft hit it out of the park.

The results were powered in part by Windows 7 sales, which include a little fudging of about $1.5 billion in revenue deferred from the first quarter of last year from a Windows 7 upgrade program. But the headline numbers are $16.2 billion in revenues (a 25 percent jump) and net income of $5.4 billion (a 51 percent jump). See Chris Paoli's article for more on the numbers.

But digging into the transcript from the investor call to discuss earnings turned up a few nuggets for the channel.

Bill Koefoed, general manager of Investor Relations for Microsoft, had good news about sales in the SMB sector, which struggled the last few years. "Sales to small and medium businesses were exceptionally strong with revenue up over 30 percent. This growth was partially due to a greater level of [partner] engagement as we had an increase of over 15 percent in the number of partners selling Microsoft products around the world."

Partners focused on enterprise could take heart from Koefoed's remarks, too. "We also saw strengthening trends in the enterprise segment, despite what is typically a seasonally weak quarter. Our compelling product portfolio across Windows, Server & Tools and the Microsoft Business Division is driving increased enterprise agreement renewals," he said.

Other highlights:

  • Revenue from server virtualization suites grew more than 50 percent
  • Windows Azure subscriptions grew 40 percent sequentially
  • Dynamics CRM had double-digit growth (unspecified)
  • Sales of Exchange and SharePoint saw double-digit growth (also unspecified)
  • PC market growth in the quarter was 9 percent to 11 percent.

Turning from the rearview mirror to the front windshield, Microsoft CFO Peter Klein kept up the positive tone.

"We expect business PC and server hardware purchasing to remain a high priority for most businesses. The business PC refresh cycle should continue through at least the remainder of this fiscal year. As was the case this quarter, we expect business PC growth to outpace consumer PC growth, and emerging market growth to outpace developed market growth," Klein said.

Say what you will about MSFT as a stock, the company's business gives it an unparalleled perspective on the health of the IT market, and the company tends to be pretty straightforward in its assessments to investors of the strength of PC and server sales. Sounds like a relatively promising foundation for Microsoft partner sales over the coming quarter.

Posted by Scott Bekker on November 01, 2010


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