Microsoft Revenues Rise 15 Percent
But the company again failed to match the new record it posted in the last quarter of 2003, where quarterly revenue rose 19 percent to breach the $10 billion mark.
Operating income for the quarter under review came in at $3.13 billion, including a pretax, stock-based compensation expense of $739 million. This was more than double the $1.54 billion posted in the last quarter of the previous fiscal year, but included a pretax, stock-based compensation expense of $665 million and pretax charges of $796 million, primarily related to the settlement of the AOL-Time Warner lawsuit.
Net income and diluted earnings per share for the quarter came in at $2.69 billion and 25 cents a share, respectively.
In comparison, net income and earnings for the fourth quarter of the last financial year were $1.48 billion and 14 cents per share, which included after-tax charges of 4 cents a share in stock-based compensation expense and 5 cents a share primarily related to the settlement of the AOL-Time Warner suit.
Microsoft on Thursday also reported a 14 percent rise in revenue to $36.84 billion for the fiscal year ended June 30, over the $32.19 billion reported last year.
Net income for fiscal year 2004 was $8.17 billion, and diluted earnings were 75 cents per share, which included after-tax charges for stock-based compensation expenses of 35 cents, charges of 17 cents related to the Sun Microsystems Inc. settlement and a fine imposed by the European Commission, and a tax benefit of 2 cents.
That compares with the previous years net income and diluted earnings per share of $7.53 billion and 69 cents, which included after-tax charges of 23 cents for stock-based compensation expenses, charges for investment impairments of 7 cents, charges related to legal settlements of 6 cents and a tax benefit of 1 cent.
John Connors, Microsofts chief financial officer, said in a statement released after the financial markets closed Thursday that this was "a great quarter, with 15 percent revenue growth as all of our businesses met or exceeded our expectations, and our progress on cost efficacy delivered higher operating margins overall. "
"Fiscal 2004 was a banner yearrevenue grew 14 percent on strong performances from each of our seven businesses, our emerging business operating margins improved, and we resolved a significant portion of our legal exposure," Connors said. "Entering into the new fiscal year, we announced our intention to provide up to $75 billion in value to shareholders over the next four years, and were confident that well continue to grow through innovation and delivering value to our customers," he said.
Breaking down the results by business unit, Connors said server and tools had grown by 20 percent over the prior fourth quarter, driven by broad platform strength, including 20 percent growth in new Windows Server license units.
Microsoft SQL Server and Microsoft Exchange also reported revenue growth rates of more than 20 percent, he said.
Information Worker revenue grew by 23 percent over the previous fourth quarter, as momentum for the Microsoft Office system of products continued across all customer segments due to strength in volume licensing and OEM sales, Connors said.
Another positive development was MSN, which posted its first-ever profitable year, moving from a $567 million loss in fiscal year 2003 to a $121 million operating profit in fiscal year 2004, a turnaround of almost $690 million. "This underscores the strength of the companys focus on its best-of-breed advertising platform and improved operational efficiency," said David Cole, senior vice president of MSN and personal services division.
Microsofts management also offered guidance for the quarter ending Sept. 30. Revenue is expected to be in the range of $8.9 billion to $9.0 billion; and operating income is expected to be in the range of $3.7 billion to $3.8 billion, including stock-based compensation expense of about $750 million.
Diluted earnings are expected to be 25 cents per share, including after-tax, stock-based compensation expense of about 5 cents per share.
Connors also said management expects the full fiscal year ending June 30, 2005, to see revenue in the range of $38.4 billion to $38.8 billion; and operating income between $16.1 billion and $16.5 billion, including stock-based compensation expense of about $2.5 billion.
Diluted earnings per share for the full year are expected to be between $1.05 and $1.08, including after-tax, stock-based compensation expense of about 16 cents.
Earlier this week, Microsoft announced that its board of directors had approved a quarterly dividend of 8 cents per share, plans to buy back as much as $30 billion of the companys stock over the next four years, and a special, one-time dividend of $3 per share.