Microsoft posts record revenue, but Windows slides

Microsoft reported record revenue of $20.9 billion, but sales at its Windows division fell 6%.

Microsoft’s quarterly revenue was up 5% from the same quarter last year, while operating income slid from $8.17bn to $7.99bn.

While the Windows division posted sliding sales, revenues at its business division were up 3%, servers and tools were up 11%, online services were up 10%, and the entertainment division – home to the Xbox – were up 15%.

The company noted that 525 million Windows 7 licenses had been sold since launch two years ago.

“We delivered solid financial results, even as we prepare for a launch year that will accelerate many of our key products and services,” said CEO Steve Ballmer.

The Windows division was probably also hurt by flagging PC sales. While Gartner has previously said PC sales were down 1.4% globally in the last quarter, Microsoft said actual sales were down by between 2% and 4%.

“The PC environment is tough and this is reflected in the results,” Global Equities Research analyst Trip Chowdhry told Reuters. “The question remains, what is going to be the growth catalyst? It’s still too early to say whether Windows 8 will be the answer because it won’t be released until later this year.”