Microsoft Reports Q4, Full Fiscal Results

By Peter Galli  |  Posted 2005-07-21 Print this article Print

Redmond's revenue for the full fiscal year is a record $39.79 billion, an 8 percent rise over the $36.84 billion reported last year.

Microsoft Corp.s revenue for the third time topped the $10 billion mark in the quarter to end-June, coming in at $10.16 billion, a 9 percent rise over the same period last year. That helped propel the Redmond, Wash., software makers revenue for the full fiscal year ending June 30, 2005, to a record $39.79 billion, an 8 percent rise over the $36.84 billion reported last year. But that is less than the record revenue of $43.3 billion to $44.1 billion that company management was predicting in April for the full fiscal year.
Click here to read more about Microsofts hopes for revenue in 2006.
Net income for fiscal year 2005 came in at $12.25 billion, and diluted earnings per share were $1.12, which included legal charges of 13 cents and tax benefits of 9 cents. That compared with net income and diluted earnings per share of $8.17 billion and 75 cents, which included legal charges of 17 cents and a tax benefit of 2 cents, the previous fiscal year. In a release after the financial markets had closed in New York on Thursday, Microsoft reported that operating income for the fourth quarter of the fiscal year, to end-June, had fallen slightly to $2.99 billion, which included $756 million in legal charges for antitrust-related claims. In the same quarter last year, it posted operating income of $3.13 billion. Net income for the fourth quarter came in at $3.70 billion, and diluted earnings per share were 34 cents, including 5 cents of legal charges and 9 cents of tax benefits. That compared with net income of $2.69 billion and diluted earnings of 25 cents per share, which included a 2-cent tax benefit, in the fourth quarter of last year. Chris Liddell, chief financial officer at Microsoft, said the company was heading into the 2006 fiscal year with "solid momentum. Fiscal 2006 is shaping up to be a strong year for growth and investment. We expect double-digit revenue growth next year, kicking off the strongest multi-year product pipeline in the companys history," he said. While Microsoft continues to invest in the business, it also returned $44 billion to investors through share repurchases and dividends over the fiscal year that just ended, Liddell said. Giving a breakdown for the fourth quarter to end-June, he said revenue and operating income growth were driven by continued strength in the server and tools business. Strong adoption of Microsofts SQL Server database product had resulted in double-digit revenue growth of 16 percent over the same quarter of the previous year. "This marks the third consecutive year that the server and tools business has delivered double-digit revenue growth and improved profitability," he said. All aspects of the Xbox business also reported strong growth, resulting in 22 percent revenue growth for the Home and Entertainment division, Liddell said. Turning to managements guidance for the full fiscal year ending June 30, 2006, Liddell said revenue is expected to be between $43.7 billion and $44.5 billion, with operating income likely to be in the range of $18.3 billion and $18.8 billion. Diluted earnings per share were expected to be in the range of $1.27 and $1.32. For the current quarter ending Sept. 30, 2005, management expected revenue of between $9.7 billion and $9.8 billion, with operating income likely at $4.3 billion to $4.5 billion. Diluted earnings per share are expected to be in the range of 29 cents to 31 cents. "All figures include the stock-based compensation expense and assume an effective tax rate of 32 percent," Liddell concluded. Check out eWEEK.coms for Microsoft and Windows news, views and analysis.
Peter Galli has been a financial/technology reporter for 12 years at leading publications in South Africa, the UK and the US. He has been Investment Editor of South Africa's Business Day Newspaper, the sister publication of the Financial Times of London.

He was also Group Financial Communications Manager for First National Bank, the second largest banking group in South Africa before moving on to become Executive News Editor of Business Report, the largest daily financial newspaper in South Africa, owned by the global Independent Newspapers group.

He was responsible for a national reporting team of 20 based in four bureaus. He also edited and contributed to its weekly technology page, and launched a financial and technology radio service supplying daily news bulletins to the national broadcaster, the South African Broadcasting Corporation, which were then distributed to some 50 radio stations across the country.

He was then transferred to San Francisco as Business Report's U.S. Correspondent to cover Silicon Valley, trade and finance between the US, Europe and emerging markets like South Africa. After serving that role for more than two years, he joined eWeek as a Senior Editor, covering software platforms in August 2000.

He has comprehensively covered Microsoft and its Windows and .Net platforms, as well as the many legal challenges it has faced. He has also focused on Sun Microsystems and its Solaris operating environment, Java and Unix offerings. He covers developments in the open source community, particularly around the Linux kernel and the effects it will have on the enterprise.

He has written extensively about new products for the Linux and Unix platforms, the development of open standards and critically looked at the potential Linux has to offer an alternative operating system and platform to Windows, .Net and Unix-based solutions like Solaris.

His interviews with senior industry executives include Microsoft CEO Steve Ballmer, Linus Torvalds, the original developer of the Linux operating system, Sun CEO Scot McNealy, and Bill Zeitler, a senior vice president at IBM.

For numerous examples of his writing you can search under his name at the eWEEK Website at


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