Microsoft Remains Upbeat Despite Slowing U.S. Economy

Microsoft's CFO predicts that the company will grow faster than overall global software spending.

The slowing U.S. economy is not affecting Microsoft's upbeat financial outlook, with the software firm expecting revenue in the region of $60 billion for its fiscal year that ends in June 2008.

Microsoft also reported on Jan. 24 a 30 percent rise in revenue to a record $16.37 billion in its fiscal second quarter that ended in December, on the back of what company officials said were "robust holiday sales and enterprise demand."

It also said it has sold more than 100 million Windows Vista licenses in the year since the new operating system was released, and that the client business has grown by about 20 percent over the same period.

In a teleconference with financial analysts and the media, Microsoft Chief Financial Officer Chris Liddell said the company had just finished its midyear review. This looked at every country and every segment across the world, and included Microsoft's sales force, whose views were factored into the guidance the company gave, he said.

While Liddell declined to say what he expected to see in fiscal 2009, he said Microsoft felt "very good" about the next six months.

Liddell also noted that about 60 percent of all its sales came from outside the United States, and said, "I feel good about global GDP over the medium to long term and I think software spending is going to be faster than global GDP." He predicted that Microsoft's sales "would grow faster than overall global software spending."

However, he did acknowledge that Microsoft could be affected by a global slowdown, but pointed to the overall growth rate of the company's products in the markets in which it competes. "We still feel very good when we think about our business on a multiyear basis."

Kevin Turner, Microsoft's chief operating officer, was equally upbeat, saying the software company continues to see healthy demand from both businesses and consumers in the United States, while growth in emerging markets is especially strong.

"Looking across Brazil, Russia, India and China, our field revenue reached a combined growth rate of more than 65 percent this quarter," Turner said in a statement issued Jan. 24 with the second quarter results.

That bullish outlook was shared by Rob Enderle, principal analyst for the Enderle Group, who told eWEEK that Microsoft's financial outlook was impressively strong.

"Given how much of Microsoft's revenue is effectively locked in, they appear to be well situated to ride through what may be a recession relatively unscathed. This suggests that while there may be things broken at Microsoft, financial management isn't currently one of them," Enderle said.