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Wednesday January 21, 4:15 pm Eastern Time
Company Press Release
SOURCE: Microsoft Corporation
Microsoft Announces Record Quarterly Profits
Strength of European and OEM Channels Offsets Asian Weakness
REDMOND, Wash., Jan. 21 /PRNewswire/ -- Microsoft Corporation (Nasdaq: MSFT - news) today announced net income of $1.13 billion, and earnings per share of $0.85 for the quarter ended December 31, 1997, a 49% increase over the $0.57 earnings per share reported for the corresponding quarter last year. Revenues totaled $3.59 billion, a 34% increase over the $2.68 billion during the same quarter last year.
''European revenues were up 33% over the same quarter last year and OEM revenues expanded 40%,'' noted Greg Maffei, chief financial officer. ''But the news isn't all good, as revenues from Southeast Asia and the Far East declined 8% from the prior quarter. Economic weakness in these geographies clouds the outlook for calendar 1998.''
Microsoft(R) Office 97 continued its impressive momentum by posting its third consecutive quarter of increased shipments, while the Microsoft Windows(R) 95 operating system was seasonally strong. ''Office 97 continues to be a success because it offers customers ease of use, reduced cost of ownership, and true web integration,'' said Jon DeVaan, vice president, Desktop Applications Division.
Microsoft Office 97 collected PC Computing's MVP award at Comdex this year, reflecting the quality of the product. Also honored for excellence at Comdex were Microsoft Internet Explorer 4.0, the Microsoft FrontPage(R) 97 web site creation and management tool, Internet Information Server 3.0, Microsoft Picture It!(TM) personal imaging software, the Microsoft Visual Basic(R) development system 5.0, and Site Server Enterprise Edition.
During the quarter, Microsoft released several new products, including Microsoft BackOffice(R) Small Business Server 4.0 and Microsoft SQL Server(TM) 6.5 Enterprise Edition, as well as updated versions of existing products, including Microsoft BackOffice Server 4.0, Microsoft Exchange Server 5.5, new Enterprise editions of Microsoft SQL Server and Microsoft Windows NT(R) Server, Microsoft Windows CE operating system 2.0, and The Microsoft Network 2.5.
Microsoft also announced several key alliances during the quarter, pledging to work more closely together with Unisys to further support Windows NT in the enterprise, and with Silicon Graphics to increasingly define cutting-edge graphics capabilities for Microsoft DirectX(R) Multimedia Services for Microsoft Windows.
Subsequent to the quarter's end, Tele-Communications Inc. (Nasdaq:LBTYA - news; TCI) announced that it had signed an agreement to license a version of the Microsoft Windows CE operating system for a minimum of five million digital set-top boxes. Additional support for the Windows CE platform was demonstrated as third parties announced their plans for the Auto PC and the Palm PC, both based on the Windows CE operating system.
A very recent survey published in the latest Fortune Magazine concluded that 73% of people consider Microsoft one of America's great businesses, and 78% believe that Microsoft produces high-quality products. ''We're gratified by these results,'' noted Bob Herbold, Microsoft's chief operating officer. ''For 23 years, Microsoft has grown by listening to our customers and helping them be more productive at work, at school, and at home. We've succeeded by working to use the power of personal computing to improve the quality of people's lives. The strong results of this quarter -- coupled with surveys like the one by Fortune and the recent Hart-Teeter survey -- are testimony that our customers think we are on the right track.''
This press release contains statements that are forward looking. These statements are based on current expectations that are subject to risks and uncertainties. Actual results will vary because of factors such as PC shipment growth, product ship schedules, life cycles, terms and conditions, product mix, competitive products and pricing, customer demand, technological shifts and other issues discussed in the Company's Form 10-K.
Founded in 1975, Microsoft is the worldwide leader in software for personal computers. The company offers a wide range of products and services for business and personal use, each designed with the mission of making it easier and more enjoyable for people to take advantage of the full power of personal computing every day.
NOTE: Microsoft, BackOffice, DirectX, FrontPage, Picture It!, Visual Basic, Windows, and Windows NT are either registered trademarks or trademarks of Microsoft Corporation in the United States and/or other countries. Other products and company names mentioned herein may be the trademarks of their respective owners.
Microsoft Corporation Income Statements (In millions, except earnings per share)
Three Months Ended Six Months Ended
Dec. 31 Dec. 31
1996 1997 1996 1997
Revenue $2,680 $3,585 $4,975 $6,715
Operating expenses:
Cost of revenue 296 313 546 566
Research and development 485 627 917 1,194
Acquired in-process
technology 0 0 0 296
Sales and marketing 737 876 1,362 1,664
General and
administrative 81 106 167 201
Total operating
expenses 1,599 1,922 2,992 3,921
Operating income 1,081 1,663 1,983 2,794
Interest income 105 157 197 299
Other expenses (46) (50) (95) (121)
Income before income
taxes 1,140 1,770 2,085 2,972
Provision for income
taxes 399 637 730 1,176
Net income 741 1,133 1,355 1,796
Preferred stock dividends 1 7 1 14
Net income available
for common shareholders $740 $1,126 $1,354 $1,782
Earnings per share:
Basic $0.62 $0.93 $1.13 $1.47
Diluted $0.57 $0.85 $1.04 $1.35
Microsoft Corporation
Balance Sheets
(In millions)
June 30, 1997 Dec. 31, 1997
Assets
Current assets:
Cash and short-term investments $8,966 $10,105
Accounts receivable 980 1,081
Other 427 450
Total current assets 10,373 11,636
Property, plant, and equipment 1,465 1,478
Equity investments 2,346 3,476
Other assets 203 250
Total assets $14,387 $16,840
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $721 $867
Accrued compensation 336 248
Income taxes payable 466 631
Unearned revenue 1,418 2,038
Other 669 712
Total current liabilities 3,610 4,496
Stockholders' equity:
Convertible preferred stock 980 980
Common stock and paid-in capital 4,509 6,104
Retained earnings 5,288 5,260
Total stockholders' equity 10,777 12,344
Total liabilities and
stockholders' equity $14,387 $16,840
Microsoft Corporation
Channel and Product Group Revenue
(In millions)
Three Months Ended Six Months Ended
Dec. 31 Dec. 31
1996 1997 1996 1997
Channels
United States and Canada $759 $993 $1,571 $1,961
Europe 631 842 1,058 1,483
Other International 424 538 817 1,076
OEM 866 1,212 1,529 2,195
Total revenue $2,680 $3,585 $4,975 $6,715
Product groups
Platforms $1,487 $1,878 $2,677 $3,580
Applications & Content 1,193 1,707 2,298 3,135
Total revenue $2,680 $3,585 $4,975 $6,715
SOURCE: Microsoft Corporation |
