Update: Microsoft records banner sales year

Proving naysayers incorrect once again, Microsoft posted a banner fiscal 2011 year in revenue, as sales of Microsoft Office, server software and Xbox continued to drive growth, even as sales of Windows leveled off, according to the company.

For the fiscal year ending June 30, Microsoft generated $69.94 billion in revenue, an all-time high for the company and a 12 percent increase in revenue compared to fiscal 2010. Of this revenue, $23.15 billion was net income, a 23 percent increase from the prior year.

For the fourth quarter of fiscal 2011, Microsoft reported revenue of $17.37 billion, an 8 percent increase from the same period a year prior. Net income was $5.87 billion, a 30 percent increase.

Microsoft Business Division's revenue for the fourth quarter grew by 16 percent for the year and 7 percent for the quarter, thanks to the recent launch of Microsoft Office 2010, which has already sold 100 million licenses. The division reported $5.8 billion in revenue for the fourth quarter and $22 billion for the full year, eclipsing revenue of Microsoft's flagship Windows and Windows Live Division, which oversees the Windows operating system.

Windows and Windows Live Division actually declined by 2 percent for the year, and 1 percent for the quarter, as demand for personal computers stagnated during this period of time. This division posted $4.74 billion in revenue for the fourth quarter and $19.02 billion for the year.

Revenue from Microsoft's Server and Tools division grew by 11 percent for the full year and 12 percent for the fourth quarter, as increased demand for Windows Server, System Center, and SQL Server continued unabated. Server and Tools reported $4.6 billion for the fourth quarter and $17 billion for the year.

The Entertainment and Devices Division posted the largest revenue growth for the company, swelling sales by 45 percent for the full year and 30 percent for the fourth quarter, thanks to sales of the Xbox game console and associated games and services. This division generated $1.5 billion in revenue for the quarter and $8.9 billion for the year.

For the fiscal year 2010 overall, the company reported revenue of $62.48 billion, and net income of $18.76 billion. That year, Microsoft recorded fourth quarter revenue of $16.04 billion and net income was $4.52 billion.

With these earnings, Microsoft bested analyst estimates across the board. Analysts expected the company to generate $17.23 billion in revenue for the quarter and $61.72 billion for the fiscal year, according to a poll by Thomson One Analytics. Net income was expected to come in at $4.9 billion for the fourth quarter and $22 billion for the year.

"In summary, we are pleased with the terrific market response to our products and our great sales execution, both of which helped drive our solid financial results," said Microsoft Chief Financial Officer Peter Klein during the follow-up conference call. "We also continue to be excited by our strategic investments and alliances, which will allow us to capitalize on long-term growth opportunities."

Overall, businesses provided more of a boost for Microsoft than consumers. Consumer revenue around PCs declined 8 percent while business sales of PCs grew by 27 percent. Microsoft estimated that the worldwide PC market declined by 2 percent in the past 12 months, sullied by weak sales in developed markets.

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