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Microsoft Reports Lower Sales, Profits

Redmond, Wash. – At the end of a busy week, where
Microsoft released Windows 7 and opened its first retail stores, it reported
lower revenue and net profits for its fiscal first quarter ended Sept. 30.

Microsoft revenue for the quarter was $12.9 billion, a 14 percent
decline from the same period of the prior year.

Net income was $3.57 billion, which represented an 18 percent decline
when compared with the prior year period.

These financial results reflect the deferral of $1.47 billion of
revenue, relating to the Windows 7 Upgrade Option program and sales of Windows
7 to OEMs and retailers before general availability.

Adding back the deferred revenue, revenue totaled $14.39 billion,
a 4 percent year-over-year decline.

“We are very pleased with our performance this quarter and
particularly by the strong consumer demand for Windows,” said Chris
Liddell, chief financial officer at Microsoft. “We also maintained our
cost discipline, which allowed us to drive strong earnings performance despite
continued tough overall economic conditions.”

Windows 7 and Windows Server 2008 R2 launched globally on Oct. 22
as anticipated. Also during October, Microsoft released Microsoft Exchange
Server 2010 to manufacturing and in July announced a strategic partnership with
Yahoo! Inc. to provide search results for their global properties.

“The worldwide launches of Windows 7, Exchange Server 2010
and Windows Server 2008 R2 are exciting milestones for Microsoft, our partners
and customers,” said Kevin Turner, chief operating officer at Microsoft in
a statement. “We are pleased by the early positive response we are
receiving for these products.”