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Microsoft Releases High Increase In Revenue, Despite Deferral

Microsoft announced its quarterly earnings last night, posting record revenue of $12.54 billion, up 6% from the same quarter a year earlier. That number reflects $1.64 billion of deffered revenue, money that was made in the last three months of 2006, selling Windows XP with free upgrades to Windows Vista, that will not be counted until the end of the first quarter of 2007, as part of the Vista launch.

If you include the deferred revenue, revenue was up an amazing 20% before Vista, which bodes very well for the future. The previous year, revenue was only up 9% in the last quarter of 2005, so Microsoft is looking real healthy even before it launches its biggest product in six years.

Operating income for the previous quarter was $3.47 billion. Net income was $2.63 billion. Earnings per share were 26 cents. Profits were down 28%, or about a billion dollars, while they would have been up $640 million if the deferred money was included. Microsoft beat analysts predictions of revenue by about $400 million.

Microsoft’s entertainment and devices division, which sells Xbox 360 and video games, posted a 76% jump in revenue to $2.96 billion, but lost $289 million (about even with last year). Microsoft predicts 12 million consoles sold by June, dropping previous estimates of 13-15 million. The online services division had revenue up 5% to $624 million, but lost $155 million in income, down 367%, while the server and tools division was up 17% to $2.84 billion. Two divisions were down: The client division (the source of the defferred revenue), down 25% to $2.569 billion, and the business division, down 11% to $3.51 billion.

Microsoft predicts $13.7-14 billion in revenue for the current quarter, including the deferred money, and $50.2-50.7 billion for the fiscal year (which is halfway finished).

60% of customers buy premium versions of Windows (Media Center/Vista Premium), a number you can expect to grow when PCs begin shipping with Vista. Windows XP Professional wound up being 5 times more profitable than XP Home.

January 26th, 2007 Posted by Nathan Weinberg | General, Corporate | no comments
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