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Microsoft’s Sales,  Profits Increase

10/24/2008 11:51:00 AM Eastern

Redmond, Wash. — Microsoft reported higher revenue and income for its fiscal first quarter, and cut its forecast due to the economy.

Microsoft reported revenue of $15.06 billion for the fiscal quarter, ended Sept. 30, a 9 percent increase over the same period of the prior year.

Net income rose from $4.28 billion in the previous year’s fiscal first quarter to $4.37 and operating income grew from $5.84 billion to $5.99 billion.

The company said it showed particular strength in multiyear annuity sales, which grew more than 20 percent during the quarter from the combined businesses of client, Microsoft business division and server and yools.

"Our customers are asking how they can save money and do more with less," said Kevin Turner, COO at Microsoft. "Microsoft is uniquely positioned to help our customers save money through supplier consolidation, increased productivity, and a low total cost of ownership through the depth and breadth of our product portfolio and solutions."

"In a challenging economic environment, the first-quarter results exhibit the strength and diversity of our business model," said Chris Liddell, chief financial officer of Microsoft.

The company’s business outlook “reflects a balance of risks and the likelihood of a continued economic slowdown. The trends seen late in the first quarter are now forecasted to continue, whereas previous expectations were for the economy to improve in the second half of the fiscal year.”

Microsoft management offered the following guidance for the quarter ending Dec. 31, 2008: Revenue is expected to be in the range of $17.3 billion to $17.8 billion and operating income is expected to be in the range of $6.1 billion to $6.4 billion.

Liddell noted, “We feel extremely good about our relative competitive position and our ability to continue outgrowing IT spend. We believe our exceptionally strong cash flow, product pipeline and financial strength will allow us to weather economic conditions well.”

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