The person named to be Microsoft’s new chief executive will inherit two companies. One is thriving, the other is sluggish.
The company’s software products and services, woven deeply into the fabric of everyday working life, are selling briskly. The other side of Microsoft is focused on consumers, who have not fully embraced the company’s new operating system, its search engine or its mobile devices.
The divergence in the two sides of Microsoft — which is searching for someone to replace its longtime leader, Steve Ballmer — was underscored on Thursday. Microsoft said in its latest quarter, its mighty corporate software and services business helped increase commercial revenue 10%, to $11.2 billion. Devices and consumer revenue grew only 4%, to $7.46 billion.
“They’re the gold standard in corporate,” said Brendan Barnicle, an analyst at Pacific Crest Securities. “And in consumer they continue to struggle.”
In the end, the corporate business helped lift overall sales and profit. The company reported net income of $5.24 billion, up from $4.47 billion the same quarter a year ago. Its revenue surged 16%, to $18.53 billion, from $16.01 billion a year earlier.
Microsoft’s stock rose more than 5% in after-hours trading.
Still, Microsoft has acknowledged that it needs to do far better in consumer services and devices, and it has made a startling series of moves over the last few months to address the problem. It is undergoing a major corporate revamping to reduce infighting among business divisions. It reached a deal to buy Nokia’s mobile device and services business for $7.2 billion.
And in the middle of those changes, Ballmer announced that he would step down as chief executive within a year.
That has left a vexing problem for the board as it tries to find his successor. Microsoft’s business is increasingly complex. It now has more than 100,000 employees, and its businesses span corporate software, video games, internet search, cloud services and tablets.
Microsoft said sales of copies of Windows to makers of consumer PCs declined 22% in the quarter from a year ago, while sales of Windows for professional PCs rose 6%. Overall, Windows licensing revenue to PC makers declined 7%.