Microsoft Announces Strong Quarterly Revenue
Windows 2000, .NET Enterprise Servers Shine Again
REDMOND, Wash., Oct. 18 /PRNewswire/ -- Microsoft Corp. (Nasdaq: MSFT - news) today announced revenue of $6.13 billion for the quarter ended Sept. 30, 2001, a 6 percent increase over the $5.77 billion reported in the prior year. Operating income totaled $2.90 billion compared to $2.78 billion in the prior year. Net income for the quarter was $1.28 billion including a $1.24 billion after-tax charge related to the impairment of certain publicly traded and private equity securities, predominantly in the cable and telecommunications industries. This charge is reflected in the $980 million investment loss reported this quarter. Diluted earnings per share for the September 2001 quarter were $0.23, including a $0.20 charge for net recognized investment losses which includes the impairment charge noted above.
(Photo: newscom.com )
``We reported solid revenue and operating results this quarter, fueled by strong customer demand for our Windows® 2000 and .NET Enterprise Server families, and our cost-control efforts,'' said John Connors, chief financial officer at Microsoft. ``While we are looking forward to the upcoming launches of Windows XP, Xbox(TM) and MSN® 7, we also recognize that this is a period of unprecedented global uncertainty that could have an impact on the economy and our business.''
The Windows 2000 Server family had a stellar quarter, with sales growth of over 20 percent. ``We were especially thrilled to see strong customer demand for Windows 2000 Advanced Server, which sold twice as many units as it did the previous year. These products are a rock-solid foundation for the entire .NET Enterprise Server lineup,'' said Brian Valentine, senior vice president for the Windows division at Microsoft. ``These results demonstrate our customers' enthusiasm for the quality, value and performance offered in our enterprise- ready products and solutions.''
The .NET Enterprise Server family of products also turned in an outstanding quarter with growth exceeding 30 percent, led by the continuing strength of SQL Server 2000 and Exchange 2000 Server. During the quarter, SQL Server 2000 was named Best Overall Database in this year's VARBusiness Annual Report Card and was deployed by customers such as Pennzoil, Nestle and Marathon Oil. Exchange Server is the market-leading messaging and collaboration product and boasts over 94 million users. During the quarter, Microsoft also launched Content Management Server 2001, which enables companies to quickly and efficiently build, deploy and maintain highly dynamic Internet, intranet and extranet web sites.
Microsoft is set to deliver two highly anticipated products to customers during the coming quarter. On Oct. 25, Microsoft will launch Windows XP at events to be held in New York City and more than 60 other cities. Windows XP extends the personal computing experience by uniting PCs, devices and services, and brings the solid foundation of Windows 2000 to home PC users, enhancing reliability, security and performance.
On Nov. 15, Microsoft will launch Xbox, the future-generation video game system. The combination of Xbox's superior graphics performance and an extensive lineup of game titles from Microsoft and leading game-developers, such as Sega, Electronic Arts, THQ, Tecmo, Infogames, Activision, Konami and LucasArts, will deliver a revolutionary experience to gamers this holiday season.
Business Outlook
Management offers the following guidance for the quarter ending Dec. 31,
2001:
-- Revenue is expected to be in the range of $7.1 billion and $7.3
billion.
-- Operating income is expected to be in the range of $2.9 and $3.0
billion.
-- Diluted earnings per share is expected to be $0.49 or $0.50.
Management offers the following guidance for the full fiscal year ending
June 30, 2002:
-- Revenue is expected to be in the range of $28.4 billion and $29.1
billion.
-- Operating income is expected to be in the range of $12.0 and $12.4
billion.
-- Diluted earnings per share is expected to be in the range of $1.61 to
$1.66.
Webcast Details
Microsoft will hold an audio webcast at 2:30 p.m. PDT (5:30 p.m. EDT) today with John Connors to discuss additional details regarding the company's performance for the quarter and other forward-looking information. The session may be accessed at microsoft.com. The webcast will be available for replay through the close of business on Friday, Oct. 26, 2001.
Forward-Looking Statements
Statements in this release that are ``forward-looking statements'' are based on current expectations and assumptions that are subject to risks and uncertainties. Actual results could differ materially because of factors such as: entry into markets with vigorous competition, market acceptance of new products and services, adoption of new licensing programs, continued acceptance of existing products and services, delays in product development and related product release schedules, reliance on sole source suppliers, or shortages of key components for hardware products that delay product delivery, any of which may cause revenues and income to fall short of anticipated levels; the risk of obsolete inventory or product returns by distributors, resellers and retailers; the risk of warranty and other claims on hardware products; higher relative marketing expenses associated with new product releases; changes in the rate of PC shipments; technological shifts; customer demand for our product and services; the support of third party software developers for new or existing platforms; competitive products, services and pricing; changes in product and service mix; product life cycles; sale terms and conditions; the company's ability to efficiently integrate acquired businesses; implementation of cost structures that align with revenue growth; the financial condition of vendors, resellers and retailers; unavailability of insurance; or uninsured losses (including the effects of the terrorist attacks on the United States on Sept. 11, 2001); adverse results in litigation; the effects of terrorist activity and armed conflict such as disruptions in general economic activity and changes in our operations and security arrangements; general economic conditions that affect demand for computer hardware or software; currency fluctuations; and financial market volatility affecting the value of our investments that may result in a reduction in carrying value and recognition of losses.
For further information regarding risks and uncertainties associated with Microsoft's business, please refer to the ``Management's Discussion and Analysis of Results of Operations and Financial Condition'' and ``Risk Factors'' sections of Microsoft's SEC filings, including, but not limited to, its annual report on Form 10-K and quarterly reports on Form 10-Q, copies of which may be obtained by contacting Microsoft's investor relations department at (800) 285-7772 or Microsoft's investor relations website at microsoft.com.
All information in this release is as of Oct. 18, 2001. The company undertakes no duty to update any forward-looking statement to conform the statement to actual results or changes in the company's expectations.
Founded in 1975, Microsoft is the worldwide leader in software, services and Internet technologies for personal and business computing. The company offers a wide range of products and services designed to empower people through great software -- any time, any place and on any device.
Microsoft, Windows, Xbox and MSN are either registered trademarks or trademarks of Microsoft Corp. in the United States and/or other countries.
The names of actual companies and products mentioned herein may be the trademarks of their respective owners.
Microsoft Corporation
Income Statements
(In millions, except earnings per share)
Three Months Ended
September 30
2000 * 2001
Revenue $5,766 $6,126
Operating expenses:
Cost of revenue 825 884
Research and development 956 1,013
Sales and marketing 1,038 1,145
General and administrative 170 187
Total operating expenses 2,989 3,229
Operating income 2,777 2,897
Losses on equity investees and other (52) (30)
Investment income (loss) 1,127 (980)
Income before income taxes 3,852 1,887
Provision for income taxes 1,271 604
Income before accounting change 2,581 1,283
Cumulative effect of accounting change (375) 0
Net income $2,206 $1,283
Earnings per share:
Basic before accounting change $ 0.49 $ 0.24
Diluted before accounting change $ 0.46 $ 0.23
Basic $ 0.42 $ 0.24
Diluted $ 0.40 $ 0.23
Weighted average shares outstanding:
Basic 5,299 5,398
Diluted 5,557 5,567
For the quarter ended September 30, 2000, revenue and cost of revenue have been reclassified to report Expedia merchant revenue on a net basis, which represents the amount charged to the customer less the amount paid to the supplier.
Microsoft Corporation
Balance Sheets
(In millions)
June 30, 2001 Sept 30, 2001
Assets
Current assets:
Cash and equivalents $ 3,922 $ 3,113
Short-term investments 27,678 33,050
Total cash and short-term investments 31,600 36,163
Accounts receivable 3,671 3,615
Deferred income taxes 1,949 1,993
Other 2,417 2,561
Total current assets 39,637 44,332
Property and equipment, net 2,309 2,261
Equity investments 14,361 12,035
Goodwill 1,511 1,511
Intangible assets, net 401 394
Other assets 1,038 834
Total assets $59,257 $61,367
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $ 1,188 $ 1,143
Accrued compensation 742 586
Income taxes payable 1,468 2,131
Unearned revenue 5,614 5,849
Other 2,120 3,153
Total current liabilities 11,132 12,862
Deferred income taxes 836 0
Stockholders' equity:
Common stock and paid-in capital 28,390 29,296
Retained earnings 18,899 19,209
Total stockholders' equity 47,289 48,505
Total liabilities and stockholders' equity $59,257 $61,367
Microsoft Corporation
Channel and Business Division Revenue
(In millions)
Three Months Ended
September 30
2000 2001
Channels
South Pacific and Americas Region $2,154 $2,433
Europe, Middle East, and Africa Region 1,085 1,105
Asia Region 708 604
OEM 1,819 1,984
Total revenue $5,766 $6,126
Business Divisions
Desktop Applications $2,139 $2,192
Desktop Platforms 1,883 2,017
Desktop Software 4,022 4,209
Enterprise Software and Services 1,037 1,193
Desktop and Enterprise Software and Services 5,059 5,402
Consumer Software, Services, and Devices 479 501
Consumer Commerce Investments 63 94
Other 165 129
Total revenue $5,766 $6,126
SOURCE: Microsoft Corp.
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Best Regards, J.T. |
