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Microsoft Reports Double-Digit Sales, Profit Gains

Redmond, Wash. –

Microsoft reported major double-digit increases in sales and
profits in its first quarter ended Sept. 30.

Revenue in the first quarter was $16.2 billion, a
25 percent increase from the same period of the prior year.

Operating income and net income for the quarter were $7.12 billion
and $5.41 billion representing increases of 59 percent and 51 percent,
respectively, when compared with the prior year period.

Prior year results reflect the deferral of $1.47 billion of
revenue, an impact relating to the Windows 7 Upgrade Option program and sales
of Windows 7 to OEMs and retailers before general availability in October 2009.

Without the deferral in the prior year, first-quarter growth rates
for revenue and operating income were 13 percent and 20 percent, and growth in
net income and earnings per share were 16 percent and 19 percent, respectively.

“This was an exceptional quarter, combining solid enterprise
growth and continued strong consumer demand for Office 2010, Windows 7, and
Xbox 360 consoles and games,” said Peter Klein, chief financial officer at
Microsoft. “Our ability to grow revenue while continuing to control costs
allowed us to deliver another quarter of year-over-year margin expansion.”

During the quarter, Microsoft saw year-over-year growth across all
business segments. Among the highlights are these:

  • Office 2010 is off to
    a fast start with revenue growing over 15 percent in its first full quarter in

  • Microsoft continues to
    see a healthy and sustaining business PC refresh cycle.

  • Xbox 360 consoles grew
    38 percent, outselling every competing console in the U.S. for each of the past
    four months.

  • For yet another quarter, Bing continued to
    grow market share, while achieving major milestones in implementing Microsoft’s
    partnership with Yahoo, the company said.

“We are seeing improved business demand and adoption. Our
enterprise agreement rates were strong, reflecting business commitment to
Windows 7, Office 2010, and our server and database products,” said Kevin
Turner, chief operating officer at Microsoft. “

Customer demand and excitement for our cloud and commercial online
services continue to grow as demonstrated by major new customer wins this
quarter for Windows Azure and by the significant customer interest in our
recently announced Office 365 service.”