Microsoft Revenue Surges on Strong Sales of Vista, Office

Revenue growth in the first quarter was the fastest since 1999.

Microsoft reported a 27 percent surge in revenue to $13.76 billion for the first quarter of 2007, which ended September 30, 2007, making it the fastest growth in revenue for any first quarter in seven years, and up almost $3 billion from the same quarter a year ago.

The software maker, headquartered in Redmond, Wash., said the results were buoyed by combined revenue growth of more than 20 percent across its client, business, and server and tools businesses.

This reflected "robust demand for Windows Vista, the 2007 Microsoft Office system, Windows Server, and SQL Server," Chris Liddell, Microsofts chief financial officer, said in a statement released Oct. 25 after the close of the financial markets in New York.

Operating income for the quarter came in at $5.92 billion compared with $4.47 billion a year ago, with net income of $4.29 billion (as opposed to $3.48 billion last year) and diluted earnings of $0.45 a share for the quarter, from $0.35 a year earlier.


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"This fiscal year is off to an outstanding start with the fastest revenue growth of any first quarter since 1999. Operating income growth of over 30 percent also reflects our ability to translate revenue into profits while making strategic investments for the future," Liddell said.

"Customer demand for Windows Vista this quarter continued to build, with double-digit growth in multi-year agreements by businesses and with the vast majority of consumers purchasing premium editions," Kevin Johnson, the president of Microsofts platform and services division, said.

With regards to the business outlook, Microsoft management said it expected revenue for the quarter ending December 31, 2007 to be in the range of $15.6 billion to $16.1 billion, with operating income of between $5.9 billion and $6.1 billion, and diluted earnings in the range of $0.44 to $0.46 a share.


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For the full fiscal year, management expected revenue of $58.8 billion to $59.7 billion, operating income of between $23.3 billion and $23.7 billion and diluted earnings in the range of $1.78 to $1.81 a share.

"This full fiscal year guidance includes approximately $85 million of estimated integration costs and in-process research and development expenses, or a $0.01 impact to diluted earnings per share, due to the acquisition of aQuantive," Liddell said.


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