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    Microsoft posts $6.37b operating profit in Q3 2012: Windows is up, Xbox is down

    Microsoft posts $6.37b operating profit in Q3 2012: Windows is up, Xbox is down


    Microsoft's Q3 2012 results are in, and its fairly positive for Microsoft. Revenue and Operating income is up, and the only division not seeing a rise is Entertainment and Devices, home of Xbox and Windows Phone.

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    Microsoft offices stock image
    Microsoft offices stock image

    It's been a good quarter for Microsoft, who just posted $17.41 billion in revenue for its fiscal Q3 2012 — a six percent increase over the same period last year. Operating income was up 12 percent to $6.37 billion. All divisions except Entertainment and Devices (home of Xbox and Windows Phone) saw an increase in profit this year, with Servers and Tools seeing the largest uptick ($1.7 billion vs. $1.35 billion) and Online Services recording a narrower loss ($497 million vs. $776 million).

    The Windows and Windows Live Division — of which 75 percent of all revenue comes from OEMs purchasing licenses to pre-install — saw just a four percent increase in revenue to $4.62 billion, resulting in a 5.7 percent increase in operating profit to $2.952 billion. (The other 25 percent comes from off-the-shelf sales of Windows OS and related PC hardware, and from Windows Live online advertising.

    The only segment that did worse this Q3 over the previous year seems to be Entertainment and Devices Division (EDD). The home of the Xbox reported a $584 million decline in quarterly revenue, resulting in an operating loss of $229 million, compared to last year's $210 million operating profit. Microsoft attributes the changes, among other things, a "soft gaming console market."

    Only half as many Xbox 360s were shipped in this Q3 — 1.4 million vs. 2.7 million in 2011 — but still reportedly remained the top-selling console for the 15th consecutive months. The operating loss was offset in part by higher Xbox Live revenue, but at the same time affected by higher operating expenses and "payments made to Nokia related to joint strategic initiatives." Research and development expenses increased $100 million (35 percent) in the quarter, as did sales and marketing — the latter attributed mostly due to "headcount-related expenses."

    The earnings call begins at 5:30PM ET with CFO Peter Klein, and yes, of course we'll be listening intently.

    Update: That call came and went with nary a surprise. We'll check the transcript later to be sure, but it's a pretty cut-and-dry good quarter for the folks in Redmond.