Microsoft met Wall Street's expectations for profit, while sales slightly edged out analyst predictions.
The company said Thursday that it made a profit of $5.2 billion in the third quarter of fiscal 2011, an increase of 31 percent compared with last year. In the third quarter of fiscal 2010, Microsoft had a profit of $4 billion.
Earnings per share were 61 cents, which included a 5 cent tax benefit. Analysts had been expecting 56 cents per share. The tax benefit was related to a settlement with the Internal Revenue Service involving a 2004 to 2006 audit.
Last year, the company reported earnings of 45 cents per share.
Sales in the quarter, which ended March 31, grew more slowly than profit, increasing 13 percent to $16.4 billion. Analysts predicted the Redmond-based company would reach $16.2 billion in sales.
Last year, company sales were $14.5 billion. Sales growth was driven by Office 2010, Xbox and Kinect, as well as stronger spending by business customers.
“We delivered strong financial results despite a mixed PC environment, which demonstrates the strength and breadth of our businesses,” Peter Klein, chief financial officer at Microsoft, said in a statement. “Consumers are purchasing Office 2010, Xbox and Kinect at tremendous rates, and businesses of all sizes are purchasing Microsoft platforms and applications.”
As those products showed strong growth, the company is faced with a sluggish PC market. Microsoft estimates PC sales fell between 1 percent and 3 percent in the third quarter, with consumer demand falling in developed markets .
Asked whether the decline resulted from the popularity of tablets such as Apple’s iPad, Todd Setcavage, director of investor relations, said: “I wouldn’t say tablets. It’s a lot of factors. You look at netbooks – they declined 40 percent; the broader consumer markets – it’s pretty clear there’s a lot of things going on.”
Corporations are still spending money to upgrade PCs, Setcavage said, with sales of Windows to business customers increasing 9 percent. Emerging markets are also grew sharply during the quarter, he said.