Microsoft announced its fiscal first-quarter 2012 earnings on Thursday, the best first quarter the company has ever recorded. The Redmond-based software giant reported revenue of $17.37 billion, up 7% from the first quarter of 2011 and on a par with analyst estimates of $17.26 billion. Operating income for the quarter was $7.2 billion, up 1% from the same quarter last year and net income was $5.74 billion, or $0.68 per share, up 6% from the first quarter of 2011. “We saw customer demand across the breadth of our products, resulting in record first-quarter revenue and another quarter of solid EPS growth,” said Microsoft CFO Peter Klein. “Our product portfolio is performing well, and we’ve got an impressive pipeline of products and services that positions us well for future growth.” Microsoft’s Business division reported $5.62 billion in revenue, up 8% from the same period last year and above analyst estimates of $5.4 billion. The company’s Server & Tools team reported $4.25 billion in revenue, up 10% from last year’s first quarter and a hair below analyst expectations of $4.3 billion. Its Windows and Windows Live Division reported a revenue increase of 2% up to $4.87 billion. In addition, Microsoft said it has now sold 450 million Windows 7 licenses since the platform’s launch. Read on for the full press release from Microsoft. 

Microsoft Reports Record First-Quarter Results 

$17.37 billion of revenue driven by solid business and consumer demand

REDMOND, Wash. — Oct. 20, 2011 — Microsoft Corp. today announced record first-quarter revenue of $17.37 billion for the quarter ended Sept. 30, 2011, a 7% increase from the same period of the prior year. Operating income, net income, and diluted earnings per share for the quarter were $7.20 billion, $5.74 billion, and $0.68 per share, which represented increases of 1%, 6%, and 10%, respectively, when compared with the prior year period.

“We saw customer demand across the breadth of our products, resulting in record first-quarter revenue and another quarter of solid EPS growth,” said Peter Klein, chief financial officer at Microsoft. “Our product portfolio is performing well, and we’ve got an impressive pipeline of products and services that positions us well for future growth.”

Since July, Microsoft reported a number of product and business highlights, including:

• The Microsoft Business Division reported $5.62 billion in first quarter revenue, an 8% increase from the prior year period which included the launch of Office 2010. Revenue from Microsoft’s productivity server offerings – including Lync, SharePoint, and Exchange – grew double-digits, and the Dynamics business grew 17% in the quarter.
• The Server & Tools segment posted $4.25 billion in first quarter revenue, a 10% increase over the prior year period and the sixth consecutive quarter of double-digit revenue growth. Microsoft also unveiled a developer preview of “Windows Server 8” at the BUILD developer conference in September.
• Windows and Windows Live Division revenue was $4.87 billion, a 2% increase over the prior period, in line with the PC market. Windows 7 momentum continued with over 450 million licenses sold since launch. At the BUILD conference, Microsoft showcased and released a developer preview of the next major release of Windows, “Windows 8.”
• Windows Phone 7.5 released with a broad array of new features, and received favorable reviews.
• Bing organic US market share grew 350 basis points year over year to 14.7% while Bing-powered US market share, including Yahoo! properties, was approximately 27%. The company also showcased the increasing integration of Bing across other products such as Xbox and Windows Phone.
• Xbox was the top-selling gaming console in the US for the ninth consecutive month. The company launched the Gears of War 3 game with over three million copies sold in the first week, and announced plans to roll out the next generation of TV entertainment on Xbox LIVE with nearly 40 content providers starting this holiday season.
• Microsoft completed its acquisition of Skype.

“We had another strong quarter for Office, SharePoint, Exchange, and Lync, and saw growing demand for our public and private cloud services including Office 365, Dynamics CRM Online, and Windows Azure,” said Kevin Turner, chief operating officer at Microsoft. “With a great set of consumer products like Windows 7 PCs, Windows Phone 7.5, Xbox and Kinect, we are excited about the holiday buying season.”

Business Outlook

Beginning in the second fiscal quarter, Microsoft’s results will include the results of Skype. The company offers updated fiscal 2012 operating expense guidance, including Skype and the associated acquisition-related expenses, of $28.6 billion to $29.2 billion.

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On a day when the business world is focused solely on Apple and the launch of its iPhone 4, RIM announced its quarterly results. Although it managed to pocket a handsome profit of $768.9 million, everything from revenue to subscribers to devices shipped missed the mark. Revenue, which was up 24% Y0Y at $4.24 billion or $1.38 per share diluted, fell short of the $4.32b analysts were expecting. The 4.9 million new subscribers RIM picked up also wasn’t good enough for the Street, which was looking to see 5 million additions. Handset sales also failed to meet expectations with 11.2 million sold. RIM is very optimistic about the current quarter — one which will see it “a range of exciting new BlackBerry products being released in the coming months” and “create significant opportunities to accelerate RIM’s growth in the second half of the fiscal year” – and is expecting it that  revenue come in at $4.4 to $4.6b while adding up to 5.2 million subscribers. EPS is targeted for $1.33 to $1.40.

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Fresh off of a solid quarter which saw profits rise 28%, HP announced today that it will be laying of some 9,000 workers as it moves to automate several of its commercial data centers. Although the move will incur a $1 billion charge through 2013, HP ultimately believes the move will ultimately save anywhere from $500 million to $700 million by 2013 and increase increase overall productivity. Approximately 6,000 new workers will be hired in various countries to replace those who lost their jobs.

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Market cap isn’t everything when determining the value of a company, but considering that just over 10 years ago Apple was free falling into irrelevance, the news today that Apple’s outstanding shares are for the first time ever worth more than Microsoft’s is nothing short of amazing. At the time of writing this, Apple’s market cap was $224.01 billion while Microsoft’s was $217.52 billion. The only company in the world with a market cap larger than Apple is Exxon Mobil at $279.21 billion. For those who aren’t entirely aware of what market cap is, it’s measured by multiplying the number of outstanding shares by their value. But as with stock prices themselves, prices tend to be influenced more by people’s perception of the company’s performance than its actual worth. So basically what we’re saying is to think of this as symbolic. It seems people have more confidence in Apple’s ability to innovate and lead than they do in Microsoft.

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Remember all of the hoopla surrounding RIM’s hostile takeover of Certicom? Well the Ontario Securities Commission sure does, as it’s alleging that former RIM VP Paul Donald personally profited from the deal thanks to some insider trading. The OSC claims that back in August of 2008, Donald was attending a RIM function where RIM top brass informed him that they were actively trying to acquire the software encryption specialists Certicom — a company whose technology is used in every single BlackBerry smartphone. Although Donald was told that Certicom was resisting the takeover, he quickly purchased 200,000 shares in the company after learning it was “dramatically undervalued,” and shortly thereafter RIM announced its intentions to purchase. That announcement also had RIM run afoul of the OSC, as Certicom’s board asked the commission to block the buyout on the grounds that Certicom investors would get a raw deal. Despite this, the aquisition eventually went through which saw Donald net $295,000 in profit. Donald, who the OSC said acted, “with knowledge of material facts about Certicom that had not been generally disclosed,” and whose purchase of the shares were, “contrary to the public interest,” will be front and center as the OSC holds a hearing on June 7th.

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Dell, the third-largest PC maker in the world, showed strong growth in Q1 of 2010 as profits totaled $441 million — or $0.22 per share — up 52% from a year ago. Revenue climbed 21% (to $14.9 billion) from the previous quarter thanks to a 21.4% increase in PC shipments; a spike which Dell attributed to, “the early stages of a corporate IT refresh.” Dell also saw a boost from server and network revenue (up 39% to $1.8 billion), mobility revenue (up 18% to $4.6 billion), and desktops sales (up 13% to $3.6 billion). Even with all this this great news Dell’s stock price dropped 5.2% in after hours trading as both the earnings per share figure and gross margin figure fell short of The Street’s expectations.

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HP managed to surpass the Street’s expectations as the company saw profits grew by 28% in the quarter ended April 30th. Capitalizing on strong demand for PCs and servers, revenue came in at $30.8 billion with an adjusted income of $1.09. Analysts were expecting to see $1.05 per share. This performance allowed HP to hold onto its title as the world’s largest manufacturer of personal computers. HP is predicting that the current quarter will see bring in $29.7 to $30 billion in revenue, with an adjusted income of $1.05 to $1.07 per share. Shares in HP are up 0.41% in after hours trading.

UPDATE: During a call with analysts, HP CEO Mark Hurd said that webOS will be coming to slates and web-connected printers. Slates with webOS is something easily imaginable, but printers? Whatever it is HP is planning, we hope it’s good.

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When the news officially broke that HP had put in a winning bid for Palm, it all seemed so simple. HP, a company that has long had its smartphone ambitions beset by poor hardware and execution, seemed to simply be the only company that was really intent on purchasing the troubled company based in Sunnyvale. But according to a recent SEC filing from Palm, what really took place in weeks leading up to HP’s successful bid was a five company bidding war. Click through to get all the facts straight from the horse’s mouth.

On February 17th, Palm CEO John Rubinstein put together a committee charged with investigating what options were at Palm’s disposal. The committee looked into scenarios which included the outright sale of the company, selling all of its IP, and licensing the rights to webOS. Then on the 25th of February — the very same day it slashed its guidance numbers — Palm began talking to 16 companies to gauge their interest in a potential buyout. Of those 16, only 5 entertained the possibility of a deal. HP was one of those companies. In the SEC filing, the names of the four others were withheld and were referred to as Companies A, B, C, and D. Companies A and B as well as HP were interested in the outright acquisition of Palm, while Companies C and D were merely interested in buying its patents. D shortly dropped out of contention for reasons unknown.

As early as March, and with four potential suitors, Palm’s board had concluded it would be best to sell the entire company. The reason for this was that Palm feared backlash for investors as any other deal could easily have devalued the value of its IP. Discussions with the four companies continued. On March 19th, Palm’s stock was devalued to $0 the day after it announced its Q3 2010 results. Four weeks later, April 13th, HP entered a bid of $4.75 per share. Two days later Company A entered a bid of $600 million, while Company C tested the waters with a stock offer. With three potential offers on the table, Palm instructed HP to up the ante. HP refused, but to its luck, Companies A and B withdrew their bids.

Company C entered a new bid worth $6 to $7 per share on April 18th. The next day, Palm sent it and HP draft merger agreements. The 20th and 21st of April saw Palm and HP try and hammer out a deal. On the 22nd, HP raised its offer to $5 per share. Company C, for whatever reason, dropped its offer to $5.50 per share on the same day and asked Palm to agree it would pay a $60 million penalty if they agreed upon a deal only to see it fall through. For the next three days, Palm and Company C tried to resolve their differences to no avail. While the two were in talks, HP raised its bid by 70¢ per share. Company C was warned that if it did not match the bid, all discussion would end. Company C countered with $800 million in exchange for all of Palm’s IP. Palm refused, and Company C walked. From that point on, it took HP and Palm until the 28th of April to get to the point where both companies would put ink to paper.

That, friends, is how Palm was acquired by HP. As we mentioned earlier, the identities of Companies A through D remain a secret, although we think we know how four of them are are: Dell, Huawei, HTC, and Lenovo.

[Via Engadget]

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According to a report from Reuters, HTC has dropped the idea of acquiring Palm after a close examining the ailing company’s books. Reuters quoted an unnamed source in Taiwan who was involved in the dead deal as saying “there just weren’t enough synergies to take the deal forward.” This means HTC has joined a growing list of companies that have decided against making a bid for Palm including Dell and Huawei. The CEO of Huawei-rival ZTE informed Reuters his company has not made a move. At present it seems Lenovo, which had over $2.4 billion in cash reserves at the end of 2009, is the new front-runner having said to be entertaining the idea of making an offer to the tune of $1.3 billion dollar, or 30% above Palm’s market cap. Shares in Lenovo rose in Asia on the news.

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Yesterday, Microsoft announced its Q3 2010 earnings, and we’re pleased to report things went well for the Redmond, WA company. Riding the success of Windows 7, Microsoft beat analysts expectations with $14.5 billion in revenue and a net income of $4.01 billion or $0.45 per share. As previously mentioned, Windows 7 was a smash hit helping Windows revenue climb 28%. Some 10% of PCs world-wide are now running Windows 7. Sales of the Xbox 360 helped the Entertainment Division’s revenue increase to $165 million. The one major downfall for Microsoft was Bing, as search engine lost the company a hefty $713 million.

Welcome back, Microsoft. You had us all quite scared for a while.

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Yesterday, AT&T had its say by announcing its Q1 2010 results, so it is only fitting today is Verizon’s turn. Unfortunately for Big Red, it didn’t fare as well as Ma Bell. Over the past three months, 423,000 new post-paid customers put ink to a contract. Overall, Verizon gained 1.5 million net customers to bring its overall total to 92.8 million. Postpaid churn matched AT&T’s 1.07%, while the overall rate was 1.4%. ARPU overall remained unchanged from Q1 2009 at $50.95 thanks in part to a 19.6% gain in data ARPU to $17.06 which helped offset the lower ARPU for traditional voice services. Revenue as a whole was up 4.4% to $15.8 billion. Service revenues were only slightly up, but once again, retail data proved to be a proficient money-maker increasing 25.6% to $4.5 billion.

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ARM Holdings, the Cambridge-based company which holds the licensing rights to the majority of processors found in modern mobile devices, is said to be in Apple’s shopping list. Apple, purported to be ARM’s largest customer, pays the company royalties for each iPod and iPhone sold. An unnamed trader speculated to The Evening Standard that Apple would likely offer ARM 400p per share, or £5.2 billion ($8 billion USD). Shares in ARM Holdings closed Wednesday on the London Stock Exchange at 250.5p, up 3.09%. Last April, Apple acquired chipmaker PA Semi for $278 million. Earlier this month rumors began circulating that Apple had bought out the privately owned and Texas-based ARM design firm Intrinsity, a company which built its reputation a upon its energy efficient microprocessors. Many believe that Intrinsity’s acceleration technology plays a key role in the A4 processor found in the iPad. If Apple were to acquire ARM, there is every possibility it could fall victim to an anti-trust legislation as it would be in a position where it could exert undue influence upon its competition which also rely heavily upon ARM. One thing is for certain, almost every mobile device manufacturers is probably sweating at the thought of this actually happening…

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Sure, this doesn’t exactly fit in with what we normally cover at BGR, but when we saw what the Treasury Department did with the design of the newly unveiled $100 bill we just couldn’t help but whip up this post. To enter into circulation in February 2011, the new $100 bill features a range of new security features that will help the average person discern what’s real from what’s fake. The two features Uncle Sam is most proud about are the 3D Security Ribbon and the Bell in the Inkwell. The 3D Security Ribbon is on the front of the bill, and is laced with images of bells and 100s which shift into one another when the note is tilted. The Bell in the Inkwell, found immediately to the right of the 3D Security Ribbon, changes from copper to green when the bill is moved giving the illusion of the bell disappearing into the inkwell. Other features and items that have been enhanced from the previous design includes a portrait watermark of Benjamin Franklin, a security thread, color-shifting 100, a gold 100, raised printing, and microprinting. If you happen to have a few stacks stacks of $100s lying around, don’t worry about them losing their status as legal tender because the Treasury Department isn’t planning on recalling the any of the existing 6.5 billion bills. If you’re pretty confused about all of this, just click the read link. The ol’ reliable forces of bureaucracy have assembled what looks to be a rather comprehensive (and no doubt expensive) website that’s chock-full of informative goodness.

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For all that’s been said in the past year about the poor performance of AT&T’s network, it seems the average person simply doesn’t care, as AT&T just announced its Q1 2010 results and — surprise! — the wireless division fared very well. Here are the key takeaways. AT&T gained 1.9 million subscribers (a Q1 record) and now has 87 million souls subscribers. Wireless service revenue was up 10.3% from the same time last year at $12.8 billion while wireless data revenue, which totalled $4.1 billion, was up 29.8% from Q1 2009. Post-paid ARPU increased to $61.89 while data ARPU moved up $20.13. Post-paid churn fell to a record low of 1.07% while the overall churn rate decreased to 1.30%. All in all, 2.7 million iPhones were activated (1/3 of them to new AT&T customers) alongside 3.3 million “3G integrated devices” (ie. touchscreen or QWERTY). Integrated devices are now in the hands of roughly half of AT&T’s 65.1 million post-paid customers and have an ARPU 1.7 times higher than other customers.

Think AT&T will be able to keep up the pace?

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