Microsoft Corp (MSFT)
Earnings Release FY14 Q2
Revenue growth driven by Xbox consoles & Surface
Xbox sold 7.4 million consoles
3.9 million Xbox One consoles sold in just 5 weeks
Xbox One was the leading console in the U.S. for the month of December according to NPD Group
3.5 million Xbox 360 consoles sold
Surface
Surface revenue of $893 million
Revenue and units more than doubled sequentially with improved Surface RT sales and the introduction of Surface 2 and Surface Pro 2
Gross margin
Launch of Xbox One contributed to gross margin decline

D&C Hardware revenue increased $1.9 billion or 68%, due primarily to $1.2 billion or 54% higher Xbox Platform revenue. Surface revenue was $893 million for the three months ended December 31, 2013. Xbox Platform revenue increased due to the release of Xbox One. We sold 7.4 million Xbox consoles during the second quarter of fiscal 2014, compared with 5.9 million Xbox consoles during the second quarter of fiscal year 2013. Surface revenue increased due to higher number of units sold, including sales of Surface 2 and Surface Pro 2.

D&C Hardware gross margin decreased $351 million or 46%, due to a $2.3 billion or 111% increase in cost of revenue, offset in part by higher revenue. Xbox Platform cost of revenue increased $1.6 billion. Surface cost of revenue was $932 million for the three months ended December 31, 2013. Xbox Platform cost of revenue increased due mainly to higher volumes of consoles sold and additional costs associated with the release of Xbox One. Surface cost of revenue increased with higher volumes sold, including sales of Surface 2 and Surface Pro 2.

Download Segment Information:Excel (27KB)
Devices and Consumer Hardware
RESULTS (in millions, except percentages)
Q214 Q213 Change
Revenue $ 4,729 $ 2,808 68%
Gross Margin $ 411 $ 762 (46)%
FY14 Earnings Release Schedule
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