By
Kevin McLaughlin
20 July 2007 12:23PM
Tags:
microsoft | xbox
Sales nonetheless grew 13 percent, due to strength in Microsoft's client, business, server and tools divisions.
Microsoft's fourth quarter profit grew 7 percent, but was weighed down by a billion-dollar decision to extend the warranty for its Xbox 360 gaming console. Earlier this month, Microsoft absorbed a US$1.06 billion charge after it decided to extend the Xbox 360 warranty by three years due to a hardware malfunction. After charges, Microsoft's earnings for the quarter ended June 30 were US$3.04 billion, or 31 cents per share, compared with US$2.83 billion, or 28 cents per share, during the same quarter last year.
Sales grew 13 percent to US$13.37 billion during the quarter, up from US$11.8 billion in the same quarter last year, driven by strength in Microsoft's client, business, server and tools divisions. For its 2007 fiscal year ended June 30, Microsoft racked up revenue of US$51.12 billion, or US$1.42 per share, up 18 percent compared to FY 2006.
Microsoft has seen a shift from licensing sales to annuity sales, due in large part to the growing popularity of Enterprise Agreements, said Chris Liddell, chief financial officer. Microsoft has continued to see strong adoption of Windows Vista and Office 2007, which launched earlier this year. Advertising revenue was up 33 percent during the quarter, according to Liddell.
In addition to Vista and Office 2007, customers are opting for annuity licensing in order to take advantage of Microsoft's upcoming releases of Windows 2008, SQL Server, Visual Studio, PerformancePoint, and CRM Live, Liddell said. "There are a lot of different products that are appealing to customers, and staying on annuity helps them from an administrative and cost perspective," he said.
For the current quarter, which ends Sept. 30, Microsoft forecast earnings per share of 38 cents to 40 cents, with revenue of between US$12.4 billion to US$12.6 billion. Wall Street analysts expect earnings per share of US38 cents and revenue of US$12.5 billion for the quarter. Microsoft upped its fiscal 2008 revenue forecast from US$56.5 billion to US$57.5 billion to between $56.8 billion and US$57.8 billion, and bumped its earnings per share estimate up one cent to between US$1.69 to US$1.73. Microsoft also invested US$7.1 billion in research and development during its fiscal 2007, up 8 percent from the previous year.