Q3 2011 Earnings Call
April 28, 2011 5:30 pm ET
Bill Koefoed - General Manager of Investor Relations
Peter Klein - Chief Financial Officer
Sandeep Aggarwal - Caris & Company
Adam Holt - Morgan Stanley
Heather Bellini - ISI Group Inc.
Brad Reback - Oppenheimer & Co. Inc.
Brent Thill - UBS Investment Bank
Philip Winslow - Crédit Suisse AG
Edward Maguire - Credit Agricole Securities (USA) Inc.
Walter Pritchard - Citigroup Inc
Colin Gillis - BGC Partners, Inc.
Tim Klasell - Stifel, Nicolaus & Co., Inc.
Robert Breza - RBC Capital Markets, LLC
Kash Rangan - BofA Merrill Lynch
Gregg Moskowitz - Cowen and Company, LLC
Previous Statements by MSFT
» Microsoft Management Discusses Q2 2011 Results - Earnings Call Transcript
» Microsoft Management Discusses F1Q11 Results - Earnings Call Transcript
» Microsoft Corporation F4Q10 (Qtr End 06/30/10) Earnings Call Transcript
Thank you, Bobbi. And thank you, everyone, for joining us this afternoon. As usual, with me today are Peter Klein, Chief Financial Officer; Frank Brod, Chief Accounting Officer; and John Seethoff, Deputy General Counsel.
Today, we filed our Form 10-Q. In addition, we posted our earnings press release and financial summary slide deck to our Investor Relations
Website at microsoft.com/investor. The slide deck is intended to follow the flow of our prepared remarks and provides a reconciliation of differences between GAAP and non-GAAP financial measures. As a reminder, we will post today's prepared remarks to our website immediately following the call until the complete transcript is available.
Today's call is being webcast live and recorded. If you ask a question, it will be included in our live transmission, in the transcript and any future use of the recording. You can replay the call and view the transcript at the Microsoft Investor Relations website until April 28, 2012.
During this call, we will be making forward-looking statements. These statements are based on current expectations and assumptions that are subject to risks and uncertainties. Actual results could materially differ because of factors discussed in today's earnings press release, in the comments made during this conference call and in the Risk Factors section of our Form 10-K, Form 10-Q and other reports and filings with the Securities and Exchange Commission. We do not undertake any duty to update any forward-looking statement.
Okay. And with that, I'll turn the call over to Peter.
Thanks, Bill. Good afternoon, everyone. This quarter, we again delivered solid financial results, reflecting strong business and consumer demand for our products and services. Despite a mixed PC environment, the breadth and depth of our portfolio drove another quarter of double-digit revenue and earnings per share growth.
On the commercial side, we saw strong multiyear licensing commitments by enterprises and robust transactional sales, particularly to small and medium businesses. Let me give more color on these.
On the business desktop, customers continued to embrace our offering. Not only is Office 2010 the fastest-selling version of Office in our company's history, but businesses are purchasing our entire productivity platform, including SharePoint, Exchange, Dynamics and Lync. And with the recently released public beta of Office 365, the next generation of our cloud productivity service, we are enabling new scenarios that weren't viable in the past, especially for small and mid-sized businesses. Office 365 eases deployment for our customers while lowering their upfront costs and provides significantly better returns on investment.
Enterprises are investing in our business infrastructure offerings, with a growing preference for our premium products. Windows Server, SQL Server and our management tools are enabling our customers to transform their data centers to be more efficient.
Companies are reaping the benefits that Windows 7 brings, including enhanced productivity, efficiency, security and manageability. Enterprise deployments of Windows 7 have more than doubled over the past 6 months. While business PC shipments showed strength this quarter, consumer PCs declined. Within both segments, emerging markets continued to be an area of strong growth.
As demonstrated by Bing's continued market share gains since its launch, we have made great strides in relevancy and design and continue to transform search beyond just queries to task completion and decision making. While we are pleased with the progress we have made with Bing, there is significant work ahead to improve the monetization of the combined Yahoo! and Bing marketplace. Advertisers are seeing strong ROI, but revenue per search is below our expectations. We have our best search technical leadership on this issue, and we are partnering closely with Yahoo! to improve monetization as quickly and efficiently as possible.
Turning to our Entertainment and Devices division, in November, we took the first step in creating a new mobile ecosystem by launching Windows Phone 7. In this quarter, we took the next step by entering into a broad strategic alliance with Nokia. Together, Nokia and Microsoft will innovate with greater speed and provide enhanced opportunities for users and partners to share in the success of the new ecosystem.
Consumers are delighted with Kinect, as well as our entire Xbox 360 platform for the revolutionary experience it brings to their living room. Kinect continues to lead the way forward in gaming and is opening the door for new scenarios to take advantage of natural user interface.
So in summary, the breadth and depth of our product portfolio, combined with prioritization of investments and our continued focus on operating expense management, allowed us to deliver another quarter of strong financial results.