Microsoft saw its profit jump up 63% and nudge the $5bn mark in its third fiscal quarter, largely due to the consumer release of Windows Vista in January.
The company saw net income of $4.93bn for the three months to March 31, on revenue that was up 32% at $14.4bn, over half a billion dollars more than Wall Street had been expecting.
Revenue growth without the $1.7bn in second-quarter sales that Microsoft deferred into the third quarter to account for its Vista pre-release discount offer would have been 17%.
The Client business unit, which is mainly Windows sales, saw revenue of $5.3bn, up 67% on the comparable quarter. It would have been $4.1bn, up 30%, without the deferral.
Part of the strength in Client was attributed to a growing percentage of revenue coming from the more expensive premium versions of Vista, which include some of the snazzier Windows updates.
Sales of Home Premium helped tilt the mix in favor of premium licenses by 17 percentage points to 71%, investor relations boss Colleen Healy said on a conference call. This was better than expected.
The quarter’s other big Microsoft release, Office 2007, also fared well, which helped the Business division in which it sits reach revenue of $4.8bn, up 34% or 20% not including the discount deferral.
It was also an encouraging sign for Online Services, where Microsoft is seen as struggling to build its own advertising business capable of competing with Google and Yahoo.
Advertising revenue was up 23%, but the continuing death-spiral of internet access revenue meant that the division saw overall growth of 11%, to $623m.
Healy said that the company is monetizing more effectively its search traffic now than it was a year ago when it was using Yahoo’s Overture service. This is a first.
The Server and Tools division, which includes Windows Server, SQL Server and developer tools, grew 15% to $2.7bn.
The Xbox-heavy Entertainment and Devices division, which saved Microsoft from an embarrassing Christmas quarter after Vista’s release slipped into 2007, fared less well. Sales declined 21% to $929m.