Microsoft Reports Record Revenue

Microsoft Reports Record Revenue – Quarter marks the successful launches of Xbox 360 and SQL Server 2005

Microsoft Corp. today announced revenue of $11.84 billion for the quarter ended December 31, 2005, a 9% increase over the same period of the prior year, marking the highest quarterly revenue in the company’s history. Net income for the quarter was $3.65 billion, which grew 5% from $3.46 billion for the same quarter of the previous year. Diluted earnings per share for the quarter were $0.34. Net results included $108 million, or $0.01 per share, in tax benefits.

Operating income for the quarter was $4.66 billion, a 2% decline from the same period in the prior year reflecting in part the impact of significant sales, marketing and product development expenses associated with major product launches.

“The growth in our core businesses was healthy during the quarter driven by strength in Server and Tools and the success of our Windows Client products in a robust PC market,” said Chris Liddell, chief financial officer of Microsoft. “The quarter also marked the beginning of an important product cycle for Microsoft with the launches of Xbox 360, SQL Server 2005, Visual Studio 2005 and Microsoft Dynamics CRM 3.0, all of which were extremely successful and well received by our customers.”

Server and Tools revenue grew 14% over the prior year on strength across the product line. The growth of SQL Server was robust with over 20% year over year revenue growth.

“Demand for our desktop and server products from enterprise customers was particularly strong this quarter with significant sales and customer momentum from our recently launched server products,” said Kevin Turner, chief operating officer at Microsoft. “We recently conducted our annual customer satisfaction survey and remain committed to driving satisfaction improvements. Our customers are responding very favorably to the value, quality, and improved security of our new product releases.”

During the quarter, Microsoft returned over $8.5 billion to shareholders in the form of dividends and share repurchases.