Multiyear annuity sales lifted Microsoft's revenue 9% for the first quarter of fiscal 2009, but the company lowered guidance for its second quarter as crisis grips the global economy, news that came as no surprise to financial analysts.
Microsoft reported revenue of US$15.06 billion for the first quarter, which ended September 30, with earnings per share of $0.48. Both numbers beat consensus estimates from Thomson Reuters analysts, who expected the company to earn US$14.78 billion for the quarter on EPS of US$0.47.
Operating income for the quarter was US$6 billion, while net income was US$4.37 billion, Microsoft reported.
While the quarter overall was strong, Microsoft lowered its revenue and EPS expectations for the second quarter, as financial analysts expected they would before results were announced on Thursday.
New guidance for the second quarter, which ends December 31, is in the range of US$17.3 billion to US$17.8 billion for revenue and US$0.51 to US$0.53 for diluted EPS. Previously, the company said it expected about US$18 billion in revenue with EPS of US$0.55 for the second quarter.
Microsoft is expected to offer more detail on these changes in a conference call on Thursday, but analysts said the economic crisis in the U.S. that is spreading around the globe is likely the reason for Microsoft lowering its guidance.
Prior to Microsoft's statement about its financials Thursday, analysts expressed concern that IT spending in the US would slow due to the crisis and that PC unit growth, a core driver of Microsoft's Windows client business, would not meet current market assumptions of 10.3% growth for the year.
For the first quarter, however, the client business was a key reason for Microsoft's positive results, the company said. Recurring revenue from a combination of the client segment as well as the Microsoft Business and Server and Tools divisions grew 20% during the quarter and contributed heavily to overall revenue growth, Microsoft said in a statement.