Microsoft Posts Record Sales, Operating Income

by Steve Smith -- TWICE, 1/25/2008

Redmond, Wash. — Microsoft reported record revenue and operating income for its fiscal second quarter, which ended on Dec. 31, and was upbeat on prospects for the 2008 calendar year.

Revenue was $16.37 billion, up 30 percent compared with the previous year’s second quarter, and operating income was up 87 percent to $6.48 billion

“Revenue of over $16 billion this quarter exceeds our previous record by $2 billion,” said Chris Liddell, chief financial officer at Microsoft. “We are extremely pleased by the broad based strength of our business performance and field execution. Throughout the first half of our fiscal year, all of our businesses met or beat our expectations.”

Since Windows Vista became generally available one year ago, Microsoft's client business has grown more than 20 percent on average, and sales of Windows Vista have surpassed 100 million licenses, the company said.

“We are pleased with the progress of Windows Vista in the market. We've hit our stride with partners and customers and are looking forward to the release of our first service pack later this quarter,” said Kevin Johnson, president of the platforms and services division at Microsoft.

Sales to business customers remained brisk in the quarter with Microsoft’s business division and the server and tools business each experiencing double-digit revenue growth rates over the prior year, and together they increased revenue over $1 billion vs. the comparable quarter last year. Microsoft’s business division generated 23 percent business revenue growth driven by the versions of Microsoft Office, Microsoft SharePoint and Microsoft Exchange that were launched last November.

“We are in the midst of another strong year with great momentum heading into calendar year 2008,” said Kevin Turner, COO at Microsoft. “We continue to see healthy demand from both businesses and consumers in the United States.”

Microsoft rolled out new consumer focused offerings during the quarter such as Windows Home Server, new versions of the Zune media player and the next generation of Windows Live Online Services. Exiting the calendar year, the life-to-date sales of Xbox 360 consoles reached 17.7 million units, representing a 70 percent increase from the prior year.