Microsoft Boosts Revenue on Strong Server, PC Sales

 
 
By Peter Galli  |  Posted 2004-10-21
 
 
 
Microsoft Corp. on Thursday posted a 12 percent rise in revenue to $9.19 billion for its fiscal first quarter, ended Sept. 30, up from $8.22 billion for the same period a year earlier, on the back of strong consumer and business demand for both servers and desktop PCs.

But that revenue figure is lower than the $9.29 billion in revenue posted for the quarter ended June 30, and some $800 million lower than the new revenue record the Redmond, Wash., software maker posted in the last quarter of 2003, during which quarterly revenue rose 19 percent to breach the $10 billion mark.

Operating income for the quarter under review came in at $4.05 billion, with net income of $2.90 billion. Diluted earnings of 27 cents per share were achieved, exceeding Microsofts guidance by 2 cents and including stock-based compensation expenses.

The quarter was "a strong beginning to what we expect will be a very good year, with continued growth in both our commercial and consumer businesses," John Connors, Microsofts chief financial officer, said in a statement released after the financial markets closed in New York.

"This quarter, we had a very healthy commercial server and desktop business driving double-digit revenue growth, and we expect to continue the trend of growing revenue faster than expenses as we work to make each of our businesses more efficient and profitable," Connors said.

Breaking down the results by business unit, Connors said revenue for the Server and Tools group grew 19 percent, driven by broad platform strength led by Windows Server, SQL Server and Exchange Server.

MSN was profitable for the second quarter in a row and grew its revenues by 10 percent over the year-ago quarter on continued strength in its Internet advertising business. Home and Entertainment revenue was up 9 percent as a result of increased sales of Xbox consoles and games, narrowing its operating loss by more than 47 percent compared with the year-ago quarter due to higher-than-expected sales of Xbox games, Connors said.

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Microsofts management also offered guidance for the quarter ending Dec. 31. Revenue is expected to come in between $10.3 billion and $10.5 billion, with operating income from $4.2 billion to $4.3 billion, which includes stock-based compensation expenses. Diluted earnings are expected to be 28 cents per share, including stock-based compensation expenses.

For the full fiscal year ending June 30, 2005, Connors said Microsoft management anticipates revenue in the range of $38.9 billion to $39.2 billion, with operating income of $16.4 billion to $16.7 billion and diluted earnings per share between $1.07 and $1.09, both including stock-based compensation expenses.

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