Microsoft reports first-quarter US$9.1bn revenues

28 Oct 2005

Microsoft has reported first-quarter revenues of US$9.1bn, up 6pc on the year. Revenue was driven by growth in PC and server shipments.

The company reported that operating income experienced a 16pc year-over-year growth for the first quarter to US$4bn, including a US$361m charge for a settlement with RealNetworks. Operating income of US$3.4bn in the same quarter a year earlier saw a charge of US$536m in a settlement with Novell.

The company said revenue and operating income growth for the quarter were driven by healthy demand for Microsoft’s core platform software and by growth in PC and server shipments.

“We are optimistic about the company’s future and today I am happy to announce our plan to accelerate the remaining portion of our previously announced stock repurchase program,” said Chris Liddell, chief financial officer at Microsoft. “Our goal is to execute the US$19bn remaining under our buyback plan twice as quickly, finishing no later than December 2006.”

Server and tools posted double-digit year-over-year revenue growth for the quarter, propelled by strength in its flagship products Microsoft SQL Server, Exchange Server and Windows Server. SQL Server showed particular strength, posting greater than 15pc revenue growth over the comparable quarter in the previous year.

Mobile and embedded devices revenue was up more than 50pc due to continued adoption of Windows mobile software. Major product announcements from both Motorola and Palm highlighted the continued customer momentum of Windows Mobile 5.0, the company said.

“We are encouraged that customers continue to see the tremendous value in our Windows Server System products,” said Kevin Turner, chief operating officer at Microsoft. “We will continue to invest in programs that further improve customer satisfaction and create value for our customers. Examples of these investments are our recently announced enhancements to our Software Assurance program.”

Liddell continued: “We continue to see healthy demand for our products and customer excitement is high for our next wave of product innovations kicking off next month with the launches of Xbox 360, SQL Server 2005 and Visual Studio 2005.”

Looking to the next quarter ended 31 December, Microsoft said revenue is expected to be in the range of US$11.9bn and US$12bn and operating income is expected to be in the range of US$4.6bn to US$4.7bn. For the full-fiscal year ended 30 June 2006, Microsoft management predicted revenues of between US$43.7bn and US$44.5bn.

By John Kennedy