Microsoft Q4 earnings jump 82pc in fourth quarter

23 Jul 2004

Software giant Microsoft has reported a massive 82pc increase in earnings to US$2.69bn during the fourth quarter. The company reported a revenue increase of 15pc to US$9.29bn, compared with US$8bn a year ago.

Microsoft also slightly raised its revenue expectation for its coming fiscal year, which ends in June 2005, but decreased its earnings per share projects to account for a planned one-time dividend of US$3 per share, which will cost the company US$32bn, in a move to transfer a portion of its considerable cash hoard to shareholders.

For the fiscal year ended 30 June 2004, the company reported revenues of US$36.8bn, up 14pc on last year and a net income of US$8.17bn.

“We had a great quarter with 15pc revenue growth as all of our businesses met or exceeded our expectations and our progress on cost efficacy delivered higher operating margins overall,” said John Connors, chief financial officer at Microsoft.

“Fiscal 2004 was a banner year – revenue grew 14pc on strong performances from each of our seven businesses, our emerging business operating margins improved, and we resolved a significant portion of our legal exposure. Entering into the new fiscal year, we announced our intention to provide up to US$75bn in value to shareholders over the next four years and we’re confident that we’ll continue to grow through innovation and delivering value to our customers,” Connors said.

Server and Tools grew 20pc compared to the prior fourth quarter. The record-level of revenue was driven by broad platform strength, including 20pc growth in new Windows Server license units and increasing demand for enterprise editions of the company’s core server products. Microsoft SQL Server and Microsoft Exchange enjoyed revenue growth rates of over 20pc. “Fuelled by strong demand for Windows Server 2003, we saw broad strength across our server products, including Small Business Server, Microsoft SQL Server and Exchange,” said Kevin Johnson, group vice president, worldwide sales marketing and services.

Information Worker revenue grew 23pc compared to the previous fourth quarter as momentum for the Microsoft Office System of products continued across all customer segments due to strength in volume licensing and OEM sales. Customers acquiring Microsoft Office during the quarter included JDS Uniphase Corporation, The World Bank and Xerox Corporation.

Microsoft’s web portal MSN posted its first-ever profitable year, moving from a US$567m loss in fiscal year 2003 to a US$121m operating profit in fiscal year 2004, a turnaround of almost $690m.

Looking ahead to the next quarter, ending September 30 2004, Microsoft forecast revenue to be in the range of US$8.9bn and US$9bn and said that operating income is expected to be in the range of US$3.7bn and US$3.8bn, including stock-based compensation expense of approximately US$750m.

By John Kennedy