Microsofts Revenues Rise

By Peter Galli  |  Posted 2005-10-27 Print this article Print

The software maker reported a 6 percent rise in revenue to $9.74 billion for the last quarter.

Growth in PC and server shipments as well as a 50 percent increase in revenue from its mobile and embedded devices unit helped buoy Microsoft Corp.s revenue growth and operating income for the first quarter of its current financial year. Chris Liddell, Microsofts chief financial officer, said in a statement released after the financial markets had closed in New York on Thursday, that the company also planned to accelerate the remaining portion of its previously announced stock repurchase program and to execute the $19 billion remaining under its buy-back plan twice as quickly, finishing no later than December 2006. The Redmond, Wash. software maker on Thursday reported a 6 percent rise in revenue to $9.74 billion for the quarter ended Sept. 30, 2005 over the same period the previous year, but is down on last quarters results.
In July the company reported that its revenue had, 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.
But operating income gained 16 percent year-over-year in this, the first quarter of its financial year, to $4.05 billion, which included a $361 million charge for the recently announced settlement with RealNetworks Inc. Operating income for the first quarter of the previous year was $3.49 billion and included a charge of $536 million related to the Novell Inc. settlement. The software maker also posted net income of $3.14 billion and diluted earnings 0f $0.29 a share in this first quarter, which included a $0.02 per share charge for the RealNetworks settlement. In the same quarter last year the company posted net income of $2.53 billion and diluted earnings a share of $0.23 per share, including a charge of $0.03 per share for the Novell settlement. Liddell said the company was optimistic about its future, given that the Server and Tools unit had posted double-digit year-over-year revenue growth for the quarter on the back of strong growth in its flagship SQL Server, Exchange Server and Windows Server products. Microsofts business intelligence crusade draws BI vendors ire. Click here to read more. "SQL Server showed particular strength, posting greater than 15 percent revenue growth over the comparable quarter in the previous year. Mobile and Embedded Devices revenue was up more than 50 percent due to continued adoption of Windows Mobile software, with major product announcements from both Motorola Inc. and Palm Inc. highlighted the continued customer momentum of Windows Mobile 5.0," he said. These financial results were a "good start to an important year for the company. We continue to see healthy demand for our products, and customer excitement is high for our next wave of product innovations kicking off next month with the launches of Xbox 360, SQL Server 2005 and Visual Studio 2005." Turning to the business outlook for the quarter ending Dec. 31, 2005, Liddell said he expected revenue in the range of $11.9 billion to $12.0 billion, with operating income likely in the range of $4.6 billion to $4.7 billion and diluted earnings per share expected at between $0.32 and $0.33. For the full fiscal year ending June 30, 2006, Liddell said Microsoft management expected revenue in the range of $43.7 billion to $44.5 billion, with operating income in the range of $17.9 billion to $18.4 billion, including $361 million for the first-quarter settlement charge. Diluted earnings were likely of $1.26 to $1.30, including $0.02 for the first-quarter settlement charge, he said. That projection is significantly higher than what Microsoft reported in July for the full fiscal year ending June 30, 2005, where revenue rose 8 percent to a record $39.79 billion. That was 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. 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


Submit a Comment

Loading Comments...
Manage your Newsletters: Login   Register My Newsletters

Rocket Fuel