Microsoft Eyes Strong 2003

REDMOND, WASH.—Microsoft Corp. executives told investors Thursday the company is poised to take advantage of its leadership position in finances, technology and people skills to carry into the next year with a flourish.

Chief Financial Officer John Connors said the company grew its net income by 7 percent last year and gained more than 5,000 employees during a period when other companies were cutting staff.

During fiscal year 2002, led by Windows XP, Microsofts desktop platforms grew $9.3 billion, or 16 percent; desktop applications grew $9.6 billion, or 1 percent; enterprise systems grew $5.1 billion, or 6 percent; and consumer and other business grew $4,4 billion, or 51 percent, he said.

Connors said he expects to see a 7 to 8 percent growth in 2003 over the $9.4 billion in revenue generated from client systems. For Windows CE and related applications, Connors said he anticipates a growth rate of 14 percent over the $60 million generated during 2002. Knowledge worker applications will grow 10 percent from the $10 billion in 2002, business solutions 76 percent to 92 percent over the $30 million in 2002. Meanwhile, server sales are expected to grow between 13 and 18 percents next year over the $4.4 billion in 2002. And MSN will grow 18 to 22 percent more than the $1.8 billion from 2002.

Overall, Connors forecasted 11 to 13 percent growth in overall revenue.

He said Microsoft expects to invest $1.2 billion over the next year.

However, he admitted there are risks, including the weak economy, the sluggish PC growth rate and ongoing litigation. Microsoft will counter that with a strong and conservative set of financials, solid long-term view and a strong management team, Connors said.

Meanwhile, CEO Steve Ballmer said Microsoft has been able to retain its good people and he listed the opportunities and challenges the company faces over the coming year.

“The most important competitors are the ones at the core,” Ballmer said. “These include IBM, Linux, J2EE (Java 2 Enterprise Edition) and Java. At the end of the day all Microsoft people are competing at the platform level.”

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