While its profit was down slightly on 2004, Microsoft reported solid results for the quarter to 31 December 2005, its fiscal Q2 2006, with a significant boost in revenues. Total revenues were US$11.8b, up 9.4% on the US$10.8b achieved in the previous corresponding quarter. Operating profit was US$4.66b, down 2% on the US$4.75b for nthe same quarter in 2004.

Net income was US$3.29b, down 5% on the US$3.46b achieved a year ago, which was also a record for Microsoft (perhaps it should console itself with the fact that it will pay and estimated US$1.85b in income taxes this quarter, which is also a record for the company).

The glitches in the Microsoft performance came from its MSN business, which at US$593m, was down 2% and the only business line to have falling revenues. Home and entertainment also failed to impress with revenues of US$1.56b, up a less than hoped for 13% due to supply problems with the Xbox 360.

According to UK-based research group Ovum, Microsoft seems to be firing on more cylinders than usual. The main profit engines of client, server and information worker all put in record high revenues. Margins remained good, with a record 38% for the server division. In addition, a couple of smaller business units that have never made a profit before (MBS and mobile and embedded) turned in respectable growth.

Ovum cited as a possible worrying downside the falling revenues of MSN and is skeptical of the future success of Microsoft's efforts to compete with Google.

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