Microsoft profits up 48% to $US4.5 billion, but Nokia earnings fall by 40%

The information technology and telco sectors were hit with mixed financial results overnight, after software giant Microsoft posted a record quarterly profit up 48%, while handset manufacturer Nokia revealed its profits plummeted, once again, by 40%.

The results come as a legal storm is brewing in the telco sector, with Chinese manufacturer Huawei preparing to defend itself against accusations from rival Motorola that it stole several secrets and patents.

Microsoft posted revenue of $US16.04 billion for the fourth quarter, which still keeps it above Apple’s $US15.7 billion even though the iPhone-maker maintains a higher market capitalisation.

Net income was $US4.52 billion, an increase of 48% from the previous corresponding period. The business division recorded revenue of $US5.25 billion, which Klein called a “very strong number” in a conference call.

The figures beat Wall Street predictions, with much of the boost was due to the company’s Windows 7 and Office 2010 platforms. The company’s shares rose over 3% after the results were announced.

The figures suggest Microsoft still plays a dominant role in software development and manufacturing, although Apple is steadily catching up and isn’t far behind.

Microsoft is also beginning to target the tablet sector, with Hewlett Packard confirming overnight that its Windows 7 tablet will hit shelves in the next few months and will target the enterprise market.

Over 175 million Windows 7 products have been sold, while the company also said its relatively new search engine, Bing, has increased its market share for 13 consecutive months.

“This quarter’s record revenue reflects the breadth of our offerings and our continued product momentum,” chief financial officer Peter Klein said in an earlier statement. “The revenue growth, combined with our ongoing cost discipline, helped us achieve another quarter of margin expansion.”

But in the telco sector, things aren’t as rosy. Market leader Nokia recorded a 40% drop in profit to $US291 million, with the announcement coming just days after rumours suggest the board is looking for a new CEO to replace Olli-Pekka Kallasvuo.

Sources told the Wall Street Journal the board is searching for a new CEO as Pekka Kallasvuo struggles to keep up with rivals producing high-end handsets more powerful than Nokia can offer.

Sales for the quarter ending June 30 were up by just 1% to $US12 billion, while market share fell to 33% from 35% in 2009. While sales of mobile computer and smartphone gadgets gained 42% to 24 million units, the company’s overall share in that market remains steady at 41%.

“Nokia will make a comeback at the higher end of the smartphone market,” Kallasvuo reportedly told a group of analysts following the announcement.

“We are approaching the end of this painful product transition at the high end of our product portfolio. Delivering the N8, with a high-quality user experience, will mark the beginning of our renewal. We will achieve our potential and regain high-end leadership in our industry.”

Meanwhile, Huawei is preparing to defend itself against charges brought forward by Motorola regarding stolen tech secrets. Motorola says its employees worked with the company to obtain information about cell network equipment.

The case, which is being heard in the federal court in Illinois, targets a former Motorola employee who allegedly reported to Huawei founder Ren Zhengfei.

Huawei, however, says the charges are baseless and it will defend itself in court.

“Huawei will vigorously defend itself against baseless allegations,” the firm said in a statement.

“As an active and significant player in global standards-setting bodies, Huawei has great respect for the rights of intellectual property holders, and will with equal vigour protect its own hard-earned intellectual property rights.”