Microsoft Does It Again -- Record Revenues in 2010

What recession? As expected, Microsoft broke revenue records again thanks to Windows 7 and Office 2010. Can the good times continue?


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Microsoft once again broke previous records for revenues and earnings in fiscal 2010 and for its fourth fiscal quarter, according to the company's latest financial results.

For the fiscal year ending June 30, Microsoft (NASDAQ: MSFT) on Thursday reported record revenue of $62.48 billion, up 7 percent from last year. Operating income came in at $24.1 billion, up 18 percent from fiscal 2009 and net income was $18.76 billion, while diluted earnings per share (EPS) were $2.10, up 30 percent from 2009, according to a company statement.

Microsoft also broke revenue and earnings records for the quarter. It brought in $16.04 billion, a 22 percent gain from the same quarter in fiscal 2009. Quarterly operating income came in at $5.93 billion and net income was $4.52 billion. Diluted EPS for the quarter was $0.51, a 50 percent gain over the fourth quarter of 2009.

The figures were well ahead of an average of estimates by financial analysts surveyed by Thomson Reuters. Analysts had predicted that the company would post fourth-quarter sales of $15.27 billion for a profit of $0.46 per share, and full-year sales of $61.7 billion, with EPS of $2.05.

Officials credited Windows 7 with much of the growth in Microsoft's sales and earnings, along with pre-sales of Office 2010, which shipped in the quarter.

"Product momentum continued during the quarter with the successful launch of Office 2010 and strong performance from existing products including Windows 7, which has sold more than 175 million licenses to date, Windows Server, Xbox, and Bing," the company said in a statement.

During a conference call with financial analysts, Microsoft's new CFO Peter Klein declared that the long-awaited business "refresh cycle" of large business adoption of Windows 7 is "well underway" and added "We expect the business refresh cycle to last through 2011."

In the most recent quarter, Windows sales brought in $4.548 billion, a 44 percent increase from the $3.169 billion in the same quarter in fiscal 2009. Overall for the year, Windows sales were up 23 percent to $18.49 billion, up from $14.97 billion in fiscal 2009.

Klein boasted that every one of Microsoft's businesses grew by double-digits over the course of the year. While that may be true, however, that doesn't mean that every one of the company's businesses made money.

Notably, the Online Services Division -- which includes the Bing search engine -- grew by 13 percent in the fourth quarter to $565 million but still showed an operating loss of $696 million.

To many industry watchers, the strong performance from a key enterprise software bellwether suggests that both consumers and IT staffs are loosening their purse-strings.

Still, Microsoft hasn't also proven the most reliable bellwether. Despite the recession and a slow recovery, the company has continued to turn in record-breaking performances despite the mixed results of its competitors and others in the space.

The company broke revenue records in the third quarter, which ended March 31, as well as for the second fiscal quarter, ended Dec. 31.

(Updated to include comments from the earnings call.)

Stuart J. Johnston is a contributing writer at InternetNews.com, the news service of Internet.com, the network for technology professionals. Follow him on Twitter @stuartj1000.

Tags: Windows, Microsoft, earnings, Windows 7, Windows XP

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