Microsoft today announced financial results for the second quarter of 2005. Q2 saw revenues of $10.82 billion, a 7% increase on the previous period, along side operating income of $4.75 billion and net income of $3.46 billion. Industry analyst Charles Di Bona told Reuters that Microsoft's results were strong, and that "you can't punch a hole in these numbers".
"Our record revenue came from across-the-board strength in both our business and consumer segments" said John Connors, chief financial officer at Microsoft. "And our long-term approach to growing new businesses is paying off. Home and Entertainment delivered its first profitable quarter and all three of the company's emerging businesses combined generated a nearly $700 million improvement in operating results compared to the second quarter of last fiscal year."
Microsoft enjoyed especially good growth in its Home and Entertainment division. It saw revenues of $1.4 billion and profits of $84 million (a year earlier the division made profits of $-397 million). Halo 2 and Xbox sales were major factors in this turn around, with 6.3m copies of Halo 2 being shipped. However, the growth seen in Q2 is somewhat fickle; company expects the unit to go back into the red later this year, with the unit not turning profitable in 2007.
Microsoft saw massive income from its highly profitable Client department with net profits for Q2 totalling $2.53 billion. The company enjoyed strong growth in the PC market and in developing markets like Asia. However, it noted continued problems from software piracy in these same markets, and has already announced measures to help deal with the problem. Elsewhere in the company, the MSN division made profits of $130 million representing a large increase on the previous year. The division enjoyed a large increase in advertising revenue, yet saw a loss in revenue from subscribers to MSN services. Microsoft's server division made strong profits of $913 million, yet faced (and continues to face) stiff competition from Linux. The Information Worker division which includes products like Microsoft Office made profits of $2.026 billion.
The strong results highlight Microsoft's resilience and strength in the software market. Despite security issues with its products and legal cases with various governments across the world, the company still holds financial clout and has proved successful yet again.