Microsoft Crushes FQ1 Expectations With Revenue of $18.5B, EPS Of $0.62, $400M In Surface Top Line

Microsoft reported its fiscal first quarter results today, with revenue of $18.53 billion and earnings per share of $0.62. Analysts had expected the first quarter of Microsoft’s fiscal 2014 to generated revenue of $17.8 billion and earnings per share of $0.54.

Microsoft’s net income was $5.24 billion, and its operating income was $6.33 billion. Microsoft ended the quarter with just over $80 billion in cash and equivalents. It remains exceptionally wealthy. Though, keep in mind that most of that cash is overseas.

In its most recent sequential quarter, Microsoft reported an earnings miss, with revenue of $19.9 billion, far under the expected $20.74 billion figure. Also, in its most recent quarter, Microsoft recorded a $900 million charge relating to its Surface tablet project. It also reported that Surface revenue for the concluding fiscal year of 2013 was $853 million.

Surface revenue for the quarter was $400 million, with Microsoft reporting that that figure represents “sequential growth in revenue and units sold over the prior quarter.” That figure is almost half of its former tally for several quarters, including launch. Microsoft will likely beat that figure in the current quarter, as it has several new Surface devices racing to market.

That decent Surface figure is contrasted in the quarter by slipping Windows OEM revenue. According to Microsoft, revenue derived from selling Windows to its OEM partners fell 7 percent on a year-over-year basis. This is a reflection of the sickness in the PC market. Microsoft tried to bully pulpit the decline by stating that “Windows Pro revenue grew for the second consecutive quarter.” Please.

Overall, revenue from the Devices and Consumer division was up 4 percent year over year to $7.46 billion. Top line from so-called “Commercial” sources was up 10 percent year over year, to $11.20 billion. I can’t imagine a better illustration of Microsoft’s current health than that: Enterprise, strong – Consumer, middling.


Microsoft is up 5 percent in after-hours trading. TechCrunch is speaking with Microsoft regarding its quarterly performance shortly, and will have more context following that call.

In its fiscal second quarter, Microsoft will begin to sell the Xbox One, Surface 2, and Surface Pro 2, along with a slew of new Lumia handsets. Microsoft doesn’t own that part of Nokia yet, but I haven’t met a person who thinks that the deal will fail, so we can unite the two. This means that its fiscal second quarter of 2014 will be by far Microsoft’s largest in terms of its device strategy. The numbers reported in January will detail success, or explain a failure of strategy.