Apple must wait another day to best Microsoft on earnings
Apple did, however, best the Redmond, Wash., software giant in terms of revenue. Microsoft announced revenue of $19.95 billion for the December quarter, compared to Apple's record $26.74 billion in revenue.
High profit margins on its software offerings boosted Microsoft's revenue above analysts' expectations of $5.93 billion. The company also gained momentum through sales of its Kinect video camera accessory for the Xbox. According to Microsoft, 8 million Kinect sensors were sold in just 60 days.
Microsoft declined to give Windows Phone 7 sales figures during its earnings call, though the company had revealed earlier this week that two million WP7 devices had been shipped to carriers by the end of December.
Analysts generally saw Microsoft's results as a mixed bag. "Outstanding numbers when you take a first look at it, but when you delve into them, Windows missed expectations by $300 million," Reuters reported Brendan Barnicle, analyst at Pacific Crest Securities, as saying.
"Kinect represents the most legitimate opportunity we have seen for the Xbox to drive some profit. I do think there is a meaningful catalyst there," said Motley Fool senior analyst Tim Beyers. "I guess the nut of it is, Microsoft is starting to do something better and they are not tripping on themselves, and that counts for something."
Slowing PC sales and the tablet boom, of which Apple holds the lion's share, have left Microsoft investors cautious. Shares of Microsoft stock closed the day down .45 percent before dipping further in after-hours trading. Over the past 12 months, Microsoft shares have shed about 3 percent.
Microsoft itself admitted Thursday that tablets like Apple's iPad has created a "little bit of a drag" on the market.
Long-time rival Apple made headlines last year when it passed up Microsoft to become the world's largest tech company in terms of market capitalization. The Mac maker went on to become the world's second largest company, eventually soaring past the $300 billion mark.
As of Thursday, Microsoft's market cap was $248 billion, compared to Apple's $316 billion.
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