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Sales of Office 2010 help Microsoft beat predictions

Microsoft Windows 7 operating systems are on display at a computer store in Santa Clara, Calif. Microsoft reported earnings on Thursday. (Associated Press)
Microsoft Windows 7 operating systems are on display at a computer store in Santa Clara, Calif. Microsoft reported earnings on Thursday. (Associated Press)

Microsoft Corp. said Thursday that its net income for the latest quarter fell slightly from a year ago, and it beat Wall Street’s expectations despite the weak personal computer market.

Sales of Office 2010 to consumers and businesses buoyed the results, as did the popularity of Kinect, Microsoft’s new motion-sensing controller for the Xbox 360 video game system.

Microsoft’s net income for the October-December quarter was $6.63 billion, compared with $6.66 billion in the same period last year. Thanks to stock buybacks, its net income rose to 77 cents per share, from 74 cents. Analysts surveyed by FactSet were expecting net income of 69 cents per share for the fiscal second quarter.

Much of Microsoft’s business depends on selling copies of the Windows operating system and Office desktop software, products that usually rise and fall with fluctuations in the personal computer market.

Microsoft launched Windows 7 in the same quarter of 2009, making for a tough comparison. Revenue plunged 30 percent in the Windows division to $5.1 billion. Worldwide personal computer shipments only grew about 3 percent in the latest quarter, as Apple Inc.’s iPad and the promise of more tablet devices to come made consumers think twice about what kind of device to buy.

However, the division that sells Office software and other programs saw revenue rise 24 percent to $6 billion. Big companies that put off buying new technology during the worst of the recession are more willing now to upgrade their systems. Microsoft said the division’s revenue from businesses rose 18 percent while revenue from consumers jumped 49 percent, both because of sales of Office 2010.

• Amazon.com uncharacteristically missed Wall Street’s revenue target in the fourth quarter, sending the stock tumbling nearly 9 percent and showing that not all Internet companies benefited equally from the holiday shopping season. The revenue miss jolted investors, signaling that expectations were running too hot for a company whose stock price had jumped nearly 75 percent since its 52-week low of $105.80 in July. Net income was $416 million, or 91 cents per share. Analysts expected 88 cents per share according to FactSet. In the same period the previous year, Amazon earned $384 million, or 85 cents per share. Revenue jumped 36 percent to $12.95 billion, but analysts were expecting $13.02 billion. After the results were reported Thursday, Amazon shares fell $15.80, or 8.6 percent, to $168.65 in extended trading.

• Caterpillar’s soaring profit reflects strong demand in developing nations and offers reasons for optimism about the global economy and the prospects for other American manufacturers. Caterpillar sells its yellow-and-black mining and construction equipment around the world and can benefit from growth wherever it’s occurring, while its reach also means the company’s business reflects global economic trends. Caterpillar predicts the world’s economy as a whole will grow at a lukewarm rate of 3.5 percent in 2011, but developing regions will grow at nearly double that pace and continue buying equipment for mining and for upgrading their infrastructure. Caterpillar said its fourth-quarter net income more than quadrupled to $968 million, or $1.47 per share, on $12.8 billion revenue. Those results beat analysts’ expectations and easily topped the $232 million in net income, or 36 cents per share, that it earned a year earlier on $7.9 billion in revenue.

• AT&T’s earnings narrowly beat expectations, but revenue was a bit light by most Wall Street expectations. More significantly, the company attracted only a net 400,000 new subscribers to contract-based plans, the fewest in years. With Verizon Wireless set to start selling the iPhone, AT&T Inc.’s CEO Randall Stephenson said the company would start focusing more on Android phones, which use Google Inc.’s software. AT&T said it expects earnings to grow by a “mid-single-digit” percentage this year, less than analysts had expected.

• Time Warner Cable Inc. reported a 22 percent jump in fourth-quarter profit as it enticed more customers to upgrade to pricier bundles of cable, Internet and phone service. It was also feeling confident enough to boost its dividend payout by 20 percent. The nation’s second-largest cable TV company lost another 141,000 cable TV subscribers, its second-biggest quarterly loss ever. Growth came instead from its high-speed Internet and phone businesses. That’s likely to fuel speculation that video on the Web has begun to encroach on the cable industry.