Microsoft Corp. performed well above expectations in its most recent quarterly earnings report thanks to increased technology spending from businesses and video game sales.
After such spending has slowed during the recession, businesses appear to be getting back on track with upgrades to computers and software.
The revival helped Microsoft with sales of its news Windows 7 OS and other software packages like Office.
For the quarter ending in September, Microsoft saw its net income rise 51 percent to $5.4 million, the equivalent of 62 cents per share. During the same quarter last year, the company’s net income was $3.6 billion, or 40 cents per share.
“We ended up in this great sweet spot in business spending that was re-emerging after the downturn,” Microsoft’s general manager of investor relations Bill Koefoed said. The recovery “aligned just perfectly with our product launches.”
Koefoed said the increased spending is expected to continue since businesses are using over 400 million computers that are four years old or older.
Had Microsoft not deferred deferred some of last years revenue from Windows sales, net income would have rose only 16 percent for the most recent quarter.
Revenue was up 25 percent, from $12.9 billion last year to $16.2 billion during the most recent quarter.
The company beat expectations in both net income and revenue. Analysts were predicting net income at 55 cents per share and revenue at $15.8 billion.
Online revenue, which comes mostly from search engine advertising, was up 8 percent to $527 million, but the segment saw its operating loss increase to $560 million as Microsoft put more money into competing with the world’s top search engine, Google.