Update: Microsoft beats forecasts with record revenue for Q2
It pointed to strong sales of Vista, Office 2007
IDG News Service - Microsoft Corp. beat Wall Street expectations for both revenue and earnings per share (EPS) for its fiscal 2008 second quarter, attributing its strong quarter to sales of core client products such as Windows Vista and Office 2007, as well as Exchange and SharePoint server software.
For the quarter ended Dec. 31, Microsoft reported revenue of $16.37 billion, an increase of 30% year over year and a number that solidly beat the $15.95 billion in revenue that Thomson Financial analysts had estimated.
Last year for the same period, Microsoft reported $12.54 billion in revenue.
Diluted EPS were 50 cents, an increase of 92% over the 27 cents in EPS reported last year, and 4 cents higher than Thomson Financial estimates of 46 cents a share. Operating income for the quarter was $6.48 billion, an increase of 92% from the $3.47 billion reported for the same period last year.
Microsoft's year-over-year percentage growth is higher than normal because of a deferral of $1.64 billion in revenue and operating income, as well as 11 cents of diluted earnings per share from the second to the third quarter of fiscal 2007. That deferred revenue contributed to the higher-than-average second-quarter percentage growth.
Without those deferrals, second-quarter growth rates for revenue, operating income and earnings per share would be 15%, 27% and 32%, respectively, for the quarter reported today.
Ahead of Microsoft's announcement, analysts had expected the company to report a strong quarter, despite economic uncertainty and fears that the U.S. economy is entering a recession.
Microsoft's client business, on sales of Windows Vista, was especially strong in the quarter, with $4.34 billion in revenue compared to $2.59 billion in revenue a year ago. According to Microsoft, its client business has grown 20% on average since Windows Vista became available nearly a year ago, and the company believes Vista began hitting its stride for adoption among customers and partners in the second quarter. According to Microsoft, it has sold more than 100 million licenses for Vista.
Looking ahead to the current quarter, which ends March 31, Microsoft said it expects revenue in the range of $14.3 billion to $14.6 billion; operating income in the range of $5.6 billion to $5.7 billion; and diluted earnings per share in the range of 43 cents to 45 cents.
For the full fiscal year ending June 30, Microsoft expects revenue in the range of $59.9 billion to $60.5 billion; operating income in the range of $24.2 billion to $24.4 billion; and diluted EPS in the range of $1.85 to $1.88.
On a conference call to discuss the results, Chief Financial Officer Chris Liddell noted that 60% of Microsoft's revenue in the second quarter came from outside the U.S., and said emerging markets are becoming increasingly important to the company's revenue. In the past several years, Microsoft has made significant investments in selling its technology in developing countries such as India, Brazil and China.
- Silicon Valley's 19 Coolest Places to Work
- Is Windows 8 Development Worth the Trouble?
- 8 Books Every IT Leader Should Read This Year
- 10 Hot Hadoop Startups to Watch
- Slideshow: 7 security mistakes people make with their mobile device
- iOS vs. Android: Which is more secure?
- 11 sure signs you've been hacked
- Windows® XP Migration: Protect and Secure Critical Data With the end of the Microsoft Windows XP operating system's lifecycle on April 8, 2014, businesses are faced with the decision to migrate...
- Exponentially Accelerate Data Protection and Recovery with Simpana 10 IntelliSnap® Snapshot Management Technology Are you making the best use of your storage array snapshot functionality? CommVault Simpana 10 IntelliSnap technology manages hardware-based snapshots across multiple vendor...
- Meeting Changing Information Management Needs with Next-Generation Email Archiving Learn more about the ever-changing landscape of next-generation email archiving and gain insight about information management needs in this Info-Tech whitepaper.
- CIOs Deliver Productivity Breakthroughs with Intelligent Digital Signage Retailers have long recognized the influence that digital signage provides over a shopper's point-of-purchase decision making process.
- Top 4 Digital Signage Fails Join RMG Networks for a look at four of the most common reasons digital signage fails in corporate businesses. Learn about strategies to...
- Increasing the Value of Your Reports and Dashboards Learn how incorporating other analytical capabilities such as predictive modeling and visualization can increase the value of your reports and dashboards by providing... All Management White Papers | Webcasts