Microsoft profits slump

 

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By Maggie Holland

Posted on 26 Jan 2007 at 11:22

Microsoft has announced its financial results for the last three months of 2006. The figures reveal a 28 per cent drop in net income year-on-year, down to a mere $2.6 billion. Nevertheless, it indicates Microsoft's bank balance is smarting somewhat from the impact of its technology guarantee programme for Windows Vista and Office 2007 and as yet sluggish business take-up of the new products.

But despite the decline in profit, which included a deferral of $1.13 billion to the next fiscal quarter, Redmond chose to focus on the positive and was upbeat about what it described as a record quarter that generated $12.54 billion in revenue.

During the financial accounting period ending 31 December, Microsoft launched Exchange Server 2007, Office 2007 and the business version of Windows Vista, the latter of which had been beset by delays and was long overdue as far as the corporate world was concerned.

But pre-empting any sceptical suggestions that the company's most recent launches are unlikely to have a massive impact on the next quarter's balance sheet if they haven't done so thus far, Microsoft responded with a history lesson.

It paralleled the last quarter with the same period in 2005, which saw the launch of Xbox 360, Microsoft SQL Server 2005, Visual Studio 2005 and Microsoft Dynamics CRM 3.0. A year after their respective births, they have generated more than $1 billion in revenue for the software giant.

'Results this quarter exceeded our expectations across the board, with revenue growth at or above our high end guidance for all divisions,' said Chris Liddell, chief financial officer at Microsoft.

'Healthy PC and server markets as well as broad-based business and consumer demand for Microsoft offerings fuelled revenue growth this quarter.'

'The execution of our field sales and marketing teams were a major contributor to this quarter's extremely positive results,' added Kevin Turner, Microsoft's chief operating officer.

'Customers have responded positively with strong contract renewals and license sales. We are pleased with such strong financial results and look forward to making Windows Vista and the 2007 Microsoft Office system widely available to all customers next week'

For its next quarter, which ends on 31 March, Microsoft expects to report revenue of $13.7 billion, with operating income in the region of $6.1 billion to $6.3 billion.

Full year revenue, when the software closes its books on 30 June this year, is expected to top $50 billion, with operating income of up to $19.7 billion.