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Microsoft Posts Higher Revenue, Lower Profits

Redmond, Wash. – Microsoft reported
higher revenue, but slightly lower net income in the quarter ended Dec. 31,

Microsoft reported revenue of $20.89
billion for the quarter, a 5 percent increase from the prior year period.

Net income was $6.62 billion, down
from the prior year’s $6.63 billion. Operating income was $7.99 billion down
from the prior year’s $8.17 billion.

Prior year results include
recognition of $224 million of deferred revenue related to the Office 2010
technology guarantee program, Microsoft said.

“We delivered solid financial
results, even as we prepare for a launch year that will accelerate many of our
key products and services,” said Steve Ballmer, CEO at Microsoft. “Coming out
of the Consumer Electronics Show, we’re seeing very positive reviews for our
new phones and PCs, and a strong response to our new Metro style design that
will unify consumer experiences across our phones, PCs, tablets, and television
in 2012.”

The Entertainment & Devices division
posted revenue of $4.24 billion, an increase of 15 percent from the prior
period. The Xbox 360 installed base now totals approximately 66 million
consoles and 18 million Kinect sensors. Xbox LIVE now has 40 million members
worldwide, an increase of 33 percent from the prior year period, Microsoft said.

“In addition to the continued
strength of our commercial business, this holiday season was the strongest in
Microsoft history, thanks to good sales execution and compelling products like
Xbox 360 and Kinect,” said Kevin Turner, chief operating officer at Microsoft. “We
are seeing a lot of excitement for new devices, from Windows 7 Ultrabooks to
new Windows Phones, as well as growing anticipation for Windows 8.”

The Windows and Windows Live division
posted revenue of $4.74 billion, a 6 percent decline from the prior period.
Microsoft has sold over 525 million Windows 7 licenses since launch.

The Online Services division
reported revenue of $784 million, a 10 percent increase from the prior year
period. Bing organic U.S. market share grew to 15.1 percent while Bing-powered
US market share, including Yahoo! properties, was approximately 27 percent.