Microsoft Beats $51 Billion Annual Revenue, Setting Record
InformationWeek
The company reported revenue increased 13% year-over-year to $13.4 billion in the fourth fiscal quarter of 2007, slightly beating analyst expectations for revenue and profit, while net income rose 7.3% to $3.0 billion. Those earnings included a fourth-quarter charge of about $1.1 billion to pay for repairs to Xbox consoles. Microsoft also saw annual revenue surpass the $50 billion milestone for the fiscal year ending June 30, with revenue of $51.1 billion, a 15% increase over the previous year. "Fiscal '07 was an excellent year from my perspective," Microsoft CFO said on the earnings call with investors. "It's exciting to see [ The company expects to continue its momentum in the coming year. "We have healthy core businesses and are strategically investing in growth opportunities, which will build on our success and contribute to continued double-digit revenue and earnings growth in fiscal year 2008," Liddell said. That strategic investment in growth opportunities includes the company's online services business, which saw revenues at $688 million, up from $588 million last year. However, due to ongoing investment in data centers, the division lost $239 million. Advertising revenue was up 33%, though growth is expected to be much more modest next quarter. Liddell attributed some of the growth in online services to Live Search Club, a promotion to give prizes to people using Microsoft's search engine. He predicted 10% to 11% growth for online services next quarter, and said to expect better integration between Windows Live services and more data center build-out over that time period. As to Windows Vista, client revenue saw an increase of 14% in the quarter, which Liddell attributed to continued demand for the new version of Windows. That said, Microsoft lowered guidance for the mix of Vista and XP units sold from 85% Vista, which it predicted in March, to a 78% Vista-XP mix expected in the next fiscal year. Liddell was cagey about Vista Service Pack 1, but said that he didn't expect SP1 to drive adoption as some believe it will. He declined to give investors a time frame for the service pack's release, though a beta version of the update is expected by the end of the year. Microsoft highlighted strength among enterprise users. "I'm extremely pleased with the traction our sales force is getting with our business customers," Liddell said. Non-annuity licensing was up more than 15%, core bookings in the client, business division and server and tools business up more than 20%, and the company said it saw a 25% increase in volume licensing. Microsoft Business Division beat high-end Microsoft guidance by more than $150 million last quarter, which the company attributed to Office 2007 and especially continued interest in SharePoint. Microsoft also pointed to 85,000 new seats of Dynamics CRM sold during the quarter. 
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