Ina Fried

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Microsoft Sees Business Tech Spending Continuing to Rebound, Benefiting Office and Windows

Microsoft began its earnings conference call on Thursday by touting the company’s record earnings and revenue–results that topped expectations amid strong performance in the Office and Xbox units.

“Business and consumer response to our latest wave of innovation…helped drive yet another quarter of healthy revenue growth,” CFO Peter Klein said during the call. “Kinect in particular exceeded our expectations,” he said, calling Kinect the fastest-growing consumer electronics product in history.

Earlier on Thursday, Microsoft posted earnings and revenue that topped expectations, amid strong performance in the Office and Xbox units. The company was also quite literally ahead of expectations as it released earnings before the close of trading after one or more media outlets got a hold of a draft version of its earnings release. The company said it will re-evaluate procedures to make sure it doesn’t happen again.

The company reiterated, as it told Mobilized on Wednesday, that its partners shipped two million Windows Phone 7 devices to carriers during the quarter. While Klein is pleased with those results, he said, “We realize we still have a lot of work ahead of us.”

Office 2010 is the strongest consumer version of the product in company history and also doing well among businesses, Klein said.

Update, 2:48 pm: Enterprise IT spending expected to grow this year, and Office and Windows remain among businesses’ top tech priorities this year, Klein said.

On the search side, Klein acknowledged that the Yahoo-Microsoft partnership has created some disruption in the marketplace, with the company hoping to get more benefit from the deal in the coming quarter.

2:52 p.m.: Microsoft’s product portfolio “has never been stronger,” Klein said.

On to Q&A.

3:05 pm: As it typically does, Microsoft noted that emerging markets are growing faster than mature ones. One analyst asked Microsoft to provide some more detail on how Microsoft’s business differs in such markets. Among other things, Microsoft said its pricing tends to be about half what it gets in mature markets.

3:08 pm: Microsoft said on the call it sees a bit of a drag from consumer devices like the iPad, though it didn’t use the “i” word.

3:11 p.m.: Call ends.


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