REDMOND, Wash., Oct. 23 /PRNewswire-FirstCall/ -- Microsoft Corp. today
announced revenue of $15.06 billion for the fiscal quarter ended Sept. 30,
2008, a 9% increase over the same period of the prior year. Operating income,
net income and diluted earnings per share for the quarter were $6.00 billion,
$4.37 billion and $0.48, respectively.
(Logo: http://www.newscom.com/cgi-bin/prnh/20000822/MSFTLOGO)
Microsoft showed particular strength in multiyear annuity sales, which
grew more than 20% during the quarter from the combined businesses of Client,
Microsoft Business Division and Server and Tools.
"Our customers are asking how they can save money and do more with less,"
said Kevin Turner, chief operating officer at Microsoft. "Microsoft is
uniquely positioned to help our customers save money through supplier
consolidation, increased productivity, and a low total cost of ownership
through the depth and breadth of our product portfolio and solutions."
Microsoft continued to add to its product and services portfolio with
innovative offerings such as Microsoft SQL Server 2008, Microsoft Hyper-V
Server 2008 and the first service update to Microsoft Dynamics CRM Online.
"In a challenging economic environment, the first-quarter results exhibit
the strength and diversity of our business model," said Chris Liddell, chief
financial officer of Microsoft.
Business Outlook
Microsoft's business outlook reflects a balance of risks and the
likelihood of a continued economic slowdown. The trends seen late in the
first-quarter are now forecasted to continue, whereas previous expectations
were for the economy to improve in the second half of the fiscal year. In this
economic environment, the company is focused on three main actions; working
with customers to provide high value products at the lowest total overall cost
of ownership, increasing focus on expense management and targeting investment
into the highest priority strategic opportunities.
Microsoft management offers the following guidance for the quarter ending
Dec. 31, 2008:
-- Revenue is expected to be in the range of $17.3 billion to
$17.8 billion.
-- Operating income is expected to be in the range of $6.1 billion to
$6.4 billion.
-- Diluted earnings per share are expected to be in the range of $0.51 to
$0.53.
Management offers the following guidance for the full fiscal year ending
June 30, 2009:
-- Revenue is expected to be in the range of $64.9 billion to
$66.4 billion.
-- Operating income is expected to be in the range of $24.4 billion to
$25.5 billion.
-- Diluted earnings per share are expected to be in the range of $2.00 to
$2.10.
Liddell noted that "we feel extremely good about our relative competitive
position and our ability to continue outgrowing IT spend. We believe our
exceptionally strong cash flow, product pipeline and financial strength will
allow us to weather economic conditions well."
Webcast Details
Microsoft will hold an audio webcast at 2:30 p.m. PDT (5:30 p.m. EDT)
today with Chris Liddell, senior vice president and chief financial officer,
Frank Brod, corporate vice president and chief accounting officer, and Bill
Koefoed, general manager of Investor Relations, to discuss details of the
company's performance for the quarter and certain forward-looking information.
The webcast will be available for replay through the close of business on Oct.
23, 2009.
About Microsoft
Founded in 1975, Microsoft (Nasdaq: MSFT) is the worldwide leader in
software, services and solutions that help people and businesses realize their
full potential.
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:
-- challenges to Microsoft's business model;
-- intense competition in all of Microsoft's markets;
-- Microsoft's continued ability to protect its intellectual property
rights;
-- claims that Microsoft has infringed the intellectual property rights
of others;
-- the possibility of unauthorized disclosure of significant portions of
Microsoft's source code;
-- actual or perceived security vulnerabilities in Microsoft products
that could reduce revenue or lead to liability;
-- government litigation and regulation affecting how Microsoft designs
and markets its products;
-- Microsoft's ability to attract and retain talented employees;
-- delays in product development and related product release schedules;
-- significant business investments that may not gain customer acceptance
and produce offsetting increases in revenue;
-- changes in general economic conditions that affect our investment
portfolio or demand for computer hardware or software;
-- adverse results in legal disputes;
-- unanticipated tax liabilities;
-- quality or supply problems in Microsoft's consumer hardware or other
vertically integrated hardware and software products;
-- impairment of goodwill or amortizable intangible assets causing a
charge to earnings;
-- exposure to increased economic and regulatory uncertainties from
operating a global business;
-- geopolitical conditions, natural disaster, cyberattack or other
catastrophic events disrupting Microsoft's business;
-- acquisitions and joint ventures that adversely affect the business;
-- improper disclosure of personal data could result in liability and
harm to Microsoft's reputation;
-- outages and disruptions of online services if Microsoft fails to
maintain an adequate operations infrastructure;
-- sales channel disruption, such as the bankruptcy of a major
distributor; and
-- Microsoft's ability to implement operating cost structures that align
with revenue growth.
For further information regarding risks and uncertainties associated with
Microsoft's business, please refer to the "Management's Discussion and
Analysis of Financial Condition and Results of Operations" 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 at Microsoft's Investor Relations Web site at
http://www.microsoft.com/msft.
All information in this release is as of Oct. 23, 2008. 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.
Microsoft Corporation
Income Statements
(In millions, except per share amounts) (Unaudited)
Three Months Ended
September 30,
2008 2007
Revenue $15,061 $13,762
Operating expenses:
Cost of revenue 2,848 2,675
Research and development 2,283 1,837
Sales and marketing 3,044 2,683
General and administrative 887 718
Total operating expenses 9,062 7,913
Operating income 5,999 5,849
Other income (expense) (8) 367
Income before income taxes 5,991 6,216
Provision for income taxes 1,618 1,927
Net income $4,373 $4,289
Earnings per share:
Basic $0.48 $0.46
Diluted $0.48 $0.45
Weighted average shares outstanding:
Basic 9,084 9,380
Diluted 9,183 9,513
Cash dividends declared per common share $0.13 $0.11
Microsoft Corporation
Balance Sheets
(In millions)
September 30, June 30,
2008 2008 (1)
(Unaudited)
Assets
Current assets:
Cash and cash equivalents $9,004 $10,339
Short-term investments (including
securities pledged as
collateral of $1,011 and $2,491) 11,718 13,323
Total cash, cash equivalents, and
short-term investments 20,722 23,662
Accounts receivable, net of
allowance for doubtful accounts of
$168 and $153 9,535 13,589
Inventories 1,640 985
Deferred income taxes 1,974 2,017
Other 3,331 2,989
Total current assets 37,202 43,242
Property and equipment, net of
accumulated depreciation of $6,622
and $6,302 6,552 6,242
Equity and other investments 4,381 6,588
Goodwill 12,291 12,108
Intangible assets, net 1,899 1,973
Deferred income taxes 1,041 949
Other long-term assets 1,751 1,691
Total assets $65,117 $72,793
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $3,351 $4,034
Short-term debt 1,975 -
Accrued compensation 2,138 2,934
Income taxes 514 3,248
Short-term unearned revenue 11,815 13,397
Securities lending payable 1,070 2,614
Other 3,520 3,659
Total current liabilities 24,383 29,886
Long-term unearned revenue 1,662 1,900
Other long-term liabilities 5,478 4,721
Commitments and contingencies
Stockholders' equity:
Common stock and paid-in capital -
shares authorized 24,000;
outstanding 8,977 and 9,151 61,655 62,849
Retained deficit, including
accumulated other comprehensive
income of $877 and $1,140 (28,061) (26,563)
Total stockholders' equity 33,594 36,286
Total liabilities and
stockholders' equity $65,117 $72,793
(1) Derived from audited financial statements
Microsoft Corporation
Cash Flows Statements
(In millions) (Unaudited)
Three Months Ended
September 30,
2008 2007
Operations
Net income $4,373 $4,289
Depreciation, amortization, and
other noncash items 585 435
Stock-based compensation expense 443 333
Net recognized losses (gains) on
investments and derivatives 36 (187)
Excess tax benefits from stock-
based payment arrangements (44) (69)
Deferred income taxes 376 357
Unearned revenue 4,186 3,821
Recognition of unearned revenue (6,044) (4,965)
Accounts receivable 3,985 2,806
Other current assets (558) (235)
Other long-term assets (116) (11)
Other current liabilities (4,552) (1,189)
Other long-term liabilities 700 493
Net cash from operations 3,370 5,878
Financing
Proceeds from short-term debt 1,975 -
Common stock issued 228 646
Common stock repurchased (6,493) (2,930)
Common stock cash dividends (998) (938)
Excess tax benefits from stock-
based payment arrangements 44 69
Net cash used in financing (5,244) (3,153)
Investing
Additions to property and
equipment (778) (510)
Acquisition of companies, net of
cash acquired (377) (5,396)
Purchases of investments (4,246) (5,997)
Maturities of investments 464 330
Sales of investments 7,075 9,120
Securities lending payable (1,543) 196
Net cash from (used in) investing 595 (2,257)
Effect of exchange rates on cash and
cash equivalents (56) 58
Net change in cash and cash
equivalents (1,335) 526
Cash and cash equivalents, beginning
of period 10,339 6,111
Cash and cash equivalents, end of
period $9,004 $6,637
Microsoft Corporation
Segment Revenue and Operating Income (Loss)
(In millions) (Unaudited)
Three Months Ended
September 30,
2008 2007
Revenue
Client $4,218 $4,139
Server and Tools 3,406 2,900
Online Services Business 770 671
Microsoft Business Division 4,949 4,117
Entertainment and Devices Division 1,814 1,929
Unallocated and other (96) 6
Consolidated $15,061 $13,762
Operating Income (Loss)
Client $3,267 $3,388
Server and Tools 1,151 959
Online Services Business (480) (267)
Microsoft Business Division 3,311 2,700
Entertainment and Devices Division 178 167
Corporate-level activity (1,428) (1,098)
Consolidated $5,999 $5,849
