Updated below: Primarily due to the delayed release of its new Windows operating system Vista, Microsoft (Nasdaq: MSFT) reported a 28 percent drop in earnings for the quarter ending Dec. 31, 2006. Microsoft said it earned $2.63 billion, or 26 cents a share, for the quarter, compared to $3.65 billion, or 34 cents, a year earlier. Other highlights from its earnings report:
—Revenue rose 6 percent to a record $12.54 billion from $11.84 billion, thanks in part to better-than-expected demand for Microsoft’s Xbox 360 video game player.
—Microsoft’s entertainment unit saw revenue rise 76 percent to $2.96 billion, or nearly one-quarter of the company’s total. The company again credited the Xbox 360 for growth in that area.
—Looking ahead, for the quarter ending March 31, Microsoft projects revenue to be in the range of $13.7 billion to $14.0 billion. Earnings Release | Webcast
Updated from conference call transcript: Revenue for our online services business grew 5% to $624 million, driven by an increase in advertising revenue of 20%, partially offset by an expected decline in access revenue…We forecast revenue in the online services business to grow between 3% and 8% for the year and 4% to 10% in quarter 3. Although we’re still forecasting growth in search queries and page views, our plans now include a more measured rate of growth for the balance of the year. Our full year forecast anticipates total advertising growth in the mid-teens, and we expect this to be driven in particular by our display business.”