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Google and Microsoft profits rise Google and Microsoft see a jump in profits
(about 4 hours later)
US technology giants Google and Microsoft have both reported rising profits. Technology giants Google and Microsoft have both reported rising profits.
Online advertising revenues helped Google's net profit climb to $3.35bn (£2.19bn) in the first three months of the year, up 16% on a year ago. Google's net profit climbed to $3.35bn (£2.19bn) in the first three months of the year, up 16% from a year earlier, boosted by online advertising revenue.
Microsoft said it made $6bn in profit over the same period, up more than 17% from a year ago, despite a lukewarm reception for Windows 8. Microsoft said it made $6bn in profit during the same period, a jump of more than 17% from a year ago.
It said also announced the departure of its chief financial officer. Its earnings, which beat market forecasts, came despite a lukewarm reception for Windows 8 and a decline in global PC sales during the period.
Peter Klein will leave at the end of June, Microsoft said, ending an 11-year history with the company and becoming the latest in a series of executives to leave the firm. Analysts said that Microsoft's profits were boosted in part by changing the way its sold its products to corporate clients, as well as cost-cutting measures.
Analysts suggested the move makes the imminent departure of chief executive Steve Ballmer less likely, as Microsoft would not want to lose two senior figures at the same time. "Microsoft has successfully transitioned into an enterprise software company and these results show that," said Kim Caughey Forrest, a senior analyst at Fort Pitt Capital.
Mr Ballmer has faced questions over his leadership of the company. "The strength of server and tools, and the actual way they sell licenses to business, is making up for the missing PC sales.
The profits came despite falling PC sales, with deferred revenues from sales of Windows 8, Office and its video games operation providing a boost. "The margins are fantastic and the online services division seems to lose less money each quarter," she added.
Windows 8, which is designed to make PCs work more like tablet computers, was released in October last year, but has faced a mixed reception. Meanwhile Google's profits were driven up by growing income from online advertising, which helped boost overall revenues to nearly $14bn for the quarter. That is up from $10.7bn during the same period last year.
Microsoft's Windows division actually showed no growth at all when deferred revenues were excluded. The results also suggested that Google may be beginning to build confidence with advertisers. The amount paid per advert is still declining, but at a slower rate than last year.
Microsoft remains the world's largest software manufacturer. Management changes
Meanwhile Google's profits are being driven by growing income from online advertising, which helped boost overall revenues to nearly $14bn for the quarter, up from $10.7bn for the same period last year. Despite the stronger-than-expected numbers, Microsoft announced that its chief financial officer (CFO), Peter Klien, will be leaving the firm at the end of June.
The results also suggest that Google is beginning to build confidence with advertisers. The amount paid per advert is still declining, but at a slower rate than last year. Mr Klein, who has been with the tech giant for 11 years, is the latest in a series of executives to leave the firm.
His departure comes just months after the Steven Sinofsky, the head of Windows division, quit the company.
The departures of the two senior figures have come as there have been questions over the leadership of chief executive Steve Ballmer.
These doubts have been driven in part by slowing growth, and amid concerns that Microsoft had not been able to make a significant impact in the new and fast-growing sectors such as the smartphone and tablet PC markets.
The leading smartphone and tablet PC makers, such as Samsung and Apple, rely more on operating systems such as Android and iOS, rather than Microsoft's Windows, which has enjoyed a dominance in the traditional PC market.
The fear for Microsoft is that as more people use smartphones and tablet PCs to access the internet, it may see its market share decline.
These concerns have grown after Windows 8, which is designed to make PCs work more like tablet computers, was greeted with mixed reviews at its launch last October.
More positively, analysts said that Mr Klien's departure from the firm suggested that an imminent departure of chief executive Steve Ballmer was unlikely.
"The CFO departure is a little bit troubling. We've had a lot of executives leaving Microsoft recently," said Brendan Barnicle, an analyst with Pacific Crest Securities.
"This also makes a departure by Steve Ballmer less likely. It would be very unusual to have a CEO leave soon after a CFO departure."