Microsoft Earnings Soar, Gates Calls For More Help To Poor

Microsoft issued fiscal Q2 earnings yesterday and simply crushed estimates. The company had quarterly revenues of more than $16 billion, which exceeded the highest previous quarterly earnings mark by a whopping $2 billion (the earnings release is here.) Profits were $4.71 billion.

The entertainment division (which has Xbox and gaming) became profitable for the first time but the real stars were Vista and Office, which sold units worth $4.3 and $4.8 billion respectively. However, in the “online services” division, which houses search and adCenter, there was a loss of $245 million on increased revenues of $863 million.

For a typical company this would be disconcerting; however, investors were not concerned, buoyed further by the comments of CFO Chris Liddell, who raised guidance for 2008 and said that Microsoft should not suffer from any economic downturn.

Separately, Microsoft Chairman Bill Gates is becoming something of a latter day Andrew Carnegie as he articulated a vision for a kinder, gentler form of capitalism that recognizes a need to help developing nations and poor people around the world. As the Wall Street Journal reports:

In a speech at the World Economic Forum in Davos, Switzerland, the software tycoon plans to call for a “creative capitalism” that uses market forces to address poor-country needs that he feels are being ignored.

“We have to find a way to make the aspects of capitalism that serve wealthier people serve poorer people as well.”

Mr. Gates isn’t abandoning his belief in capitalism as the best economic system. But in an interview with the Journal last week at his Microsoft office in Redmond, Wash., Mr. Gates said that he has grown impatient with the shortcomings of capitalism. He said he has seen those failings first-hand on trips for Microsoft to places like the South African slum of Soweto, and discussed them with dozens of experts on disease and poverty. He has voraciously read about those failings in books that propose new approaches to narrowing the gap between rich and poor.

Andrew Carnegie was a US Steel baron who was regarded as a ruthless capitalist and became the world’s richest man. He then became the world’s greatest philanthropist and gave away most of his wealth to numerous institutions, including public libraries. Gates would appear to be his heir in many respects.