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Microsoft Desktop Software Sales Climb 11%

Redmond, Wash. – Robust sales of the Windows XP operating system drove up Microsoft’s Desktop Platform segment’s revenue at Microsoft 11 percent in the company’s fiscal third quarter, with Desktop platform division sales reaching $2.3 billion, up from $2.1 billion in the year-ago period.

Total sales in the Desktop Software division hit $4.7 billion, up from $4.5 billion in the same quarter in 2001.

‘Windows XP continues to drive excitement for the personal computer during a challenging time for the industry as a whole,’ said Jim Allchin, group vice president of the platforms division.

Microsoft said its Xbox game system was one of the company’s long-term projects that would enjoy heavy expenditures next year for research and development.

The company also said North American Xbox sales are on target, and that 3.5 million to 4 million Xbox consoles will have been shipped worldwide by the end of the fiscal year in June, down from an earlier estimate of 4.5 million to 6 million. Microsoft expects it could have up to 11 million Xbox consoles sold by the middle of 2003.

Overall Microsoft revenue for the third quarter was $7.2 billion, an increase of 13.2 percent from the $6.4 billion registered in 2001. Net income reached $2.7 billion, compared with $2.5 billion year over year.

Microsoft, which expects revenue of between $7 billion and $7.1 billion for its fourth quarter, said guidance for 2003 in operating income is below what analysts are expecting. The company anticipates revenue of $31.5 billion to $32.4 billion in fiscal 2003, with operating income between $13.3 billion and $13.6 billion.

For the nine months, Desktop Platform division revenue hit $6.9 billion, up from $6 billion over the same period the previous year. Total sales for the Desktop Software division reached $13.9 billion for the current nine months, compared with $13 billion year over year.