Microsoft Revenues Up 30%, EPS Up 92%

Microsoft announced record revenues and earnings for the quarter ended December 31, 2007. Revenues were up 30% to $16.4 Billion. Operating Income was up 87% to $6.5 Billion. And Earnings Per Share (EPS) were up 92% to $0.50 per share.

All Microsoft (Nasdaq MSFT) business units reported strong results. Here is a breakdown by division:

• Windows Client (Vista/XP): $4.3 Billion, up 68%
• MBD (Office/SharePoint): $4.8B, up 37%.
• Server & Tools (SQL Server/Visual Studio): $3.3 Billion, up 15%.
• Entertainment (Xbox & Zune): $3.1 Billion
• Online Services (MSN/Live): $863M, up 38%.

Other Highlights:

• Windows Vista has sold over 100 Million licenses
• Xbox 360 has sold 17.7 Million units
• Xbox Live - over 10 Million subscriptions
• Windows Live - over 420 Million accounts

Strong Outlook - The outlook for next quarter and the fiscal year remains strong too, even in light of stock market woes and talk of recession. Here is the guidance from Microsoft management;

Microsoft management offers the following guidance for the quarter ending March 31, 2008:

Revenue is expected to be in the range of $14.3 billion to $14.6 billion.

Operating income is expected to be in the range of $5.6 billion to $5.7 billion.

Diluted earnings per share are expected to be in the range of $0.43 to $0.45.

Management offers the following guidance for the full fiscal year ending June 30, 2008:

Revenue is expected to be in the range of $59.9 billion to $60.5 billion.

Operating income is expected to be in the range of $24.2 billion to $24.4 billion.

Diluted earnings per share are expected to be in the range of $1.85 to $1.88.

 

It is nice to see some good economic news this week after all the turbulence in the stock market. Wall Street is always looking ahead so the "guidance" is sometimes as important as the actual numbers for the quarter. Microsoft gave strong guidance for the quarters ahead as well. Let's see how investors react. Henry Blodget at Silicon Alley Insider likes what he sees.

UPDATE: Steve Lohr at The New York Times talks about the guidance and why it is so important. I encourage you to read the whole story but here is an excerpt.

Other leading technology companies, like Intel and Apple, have reported strong quarterly results, only to have their shares punished after they warned of cloudy outlooks given the increasing possibility of an economic recession.

But Microsoft executives still sound confident. In a conference call with analysts, Christopher Liddell, Microsoft’s chief financial officer, said, “We have not seen any significant spillover for an economic slowdown in the U.S.”

Sixty percent of Microsoft’s business is now outside the United States, which helps insulate the company from the chill of a slowdown in the American economy. Even so, Mr. Liddell noted that Microsoft’s sales in the American market in the last six months had grown at a healthy 15 percent clip.

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Comments

[l.a.guy]

"Entertainment (Xbox & Zune): $3.1 Billion"

I'm going to take a wild guess that $3.09B of that was XBox revenue.

I was looking at Zune 2.0 at CES and I think this time MS did a good job. It's too bad this wasn't Zune 1.0. Taking on the iPod is going to be tough under the best circumstances, but I think they really hurt their credibility in that space by rushing an inferior product to market. Unfortunately I think Apple leap frogged the Zune 2.0 interface with their latest offerings, but at least now I'd consider buying a Zune where as it was unthinkable a year ago.

[D&G]

I'm extremely happy with the results, as the stock is rising further upwards.
And the growth in eps is amazing!

[Edwin Khodabakchian]

You have to give credit when credit is due: both the numbers and the guidance are extremely impressive.

With that much cash, why didn't Microsoft pick up BEA, MySQL and Spring? It seemed like a good opportunity to add some Java+Open Source genes to the Microsoft .Net DNA (while pissing off both Oracle and Sun!)

Kudos!

[/pd]

it just does not make sense
"Online Services (MSN/Live): $863M, up 38%."

with the MSFT/YHOO deal why a $44.6 infusion - cant they build it themselves ?

[John]

the Microsoft machine isn't going to stop anytime soon