Microsoft Announces Record Fiscal Year Revenue and Income

REDMOND, Wash., July 18, 2000 — Microsoft Corp. today announced revenue of $22.96 billion for the fiscal year ended June 30, 2000, a 16 percent increase over the $19.75 billion reported last year. Net income totaled $9.42 billion. Diluted earnings per share were $1.70, a 20 percent increase compared to $1.42 in fiscal 1999.

For the quarter ended June 30, 2000, diluted earnings per share were $0.44, a 10 percent increase over the $0.40 for the corresponding quarter last year. Revenue and net income were $5.80 billion and $2.41 billion compared to $5.76 billion and $2.20 billion, respectively, for the same quarter last year.

“We experienced another record year of business results despite many challenges. In particular, the Asia region rebounded nicely and our consumer business experienced a significant increase in revenue,”
said John Connors, chief financial officer at Microsoft.
“Although we remain guarded in the near term about business PC growth rates, we look forward to the tremendous opportunity in front of us with the Windows® 2000 generation of server products — including Windows 2000® and the soon-to-be-available SQL Server™ 2000 and Exchange Server 2000.”

Microsoft® Windows 2000 continued to gain broad customer and industry support during the quarter. Many large organizations, including Royal Dutch/Shell, Xerox Corp., Reed Elsevier and Motorola Inc., have committed to and are deploying Windows 2000 Professional, citing it as the most manageable and reliable version of Windows to date. In addition, leading PC manufacturers including Compaq Computer Corp., Dell Computer Corp., Hewlett-Packard Co., IBM Corp. and Toshiba Corp., are deploying Windows 2000 Professional internally across their organizations, signaling their endorsement of Windows 2000 as the ideal platform for corporate desktops.

Customer enthusiasm for Windows 2000 Server also was strong in the quarter, with ABN AMRO, InfoSpace Inc. and Data Return Corp. as showcase examples of the accelerating deployment momentum for the platform in multinational corporations and new economy dot-com and e-commerce companies. Sales of Windows 2000 Advanced Server in the quarter doubled over Windows NT® Server 4.0 Enterprise Edition in the prior year, reflecting increasing customer adoption of Microsoft’s software-based approach to achieving the high levels of scalability and reliability demanded by today’s mission-critical applications. For example, on June 13th, it was announced that Windows 2000 would be the platform for the mission-critical Integrated Warfare System on the first of the U.S. Navy’s next generation aircraft carriers, the CVN-77, also dubbed the
“Smart Carrier.”

On June 22, 2000, Microsoft unveiled the Microsoft .NET platform, its next generation of software and services that will enable a new era of personal empowerment and business opportunity for consumers, businesses and software developers. Based on open Internet standards and protocols, particularly the Extensible Markup Language (XML), this new family of products and technologies will be aimed at making computing and communications easier for all users. Microsoft .NET also will create opportunities for developers to build Internet services and businesses more easily and to integrate those offerings directly with their business partners and customers.

“By creating the next-generation platform through which devices and services on the Web can cooperate with each other, Microsoft is driving new opportunities for developers and industry partners that will elevate the user experience to new levels of power and simplicity,”
said Steve Ballmer, president and CEO at Microsoft.
“We are leading the Internet revolution to its next stage, ensuring that the wealth of information and resources out there works together easily and seamlessly.”

During the quarter, the MSN™
network of Internet services continued its impressive run and established itself as the Internet’s largest network. The consolidated network of MSN Web sites also recorded industry-leading gains in several key metrics during the quarter, including 20 percent growth in the average minutes of use per MSN user, and 19 percent growth in total reach in the U.S. since July 1999. MSN Internet Access continued the robust growth demonstrated during the prior quarter, with the subscriber base growing 20 percent to 3 million.

MSN has established the broadest global presence in the industry, with availability in 33 markets and 17 languages. With strong growth in users worldwide, MSN is now the number one Web site in the United Kingdom, Canada, Australia and New Zealand and among the top three in most global markets, according to Nielsen//NetRatings.

On July 12, 2000, at the annual Microsoft Professional Developers Conference, Microsoft and Intel Corp. announced a preview release of the 64-bit Windows operating system for the Intel Itanium processor. Microsoft also announced the availability of software development kits (SDKs) and driver development kits (DDKs) for developers building 64-bit applications, key milestones in the company’s continued investment in enabling the next generation of scalability and reliability for mission-critical enterprise computing.

During the quarter, Microsoft also announced the release to manufacturing of Windows Me, the latest version of the Windows operating system designed specifically for the home user. Retail availability of Windows Me is set for Thursday, Sept. 14, 2000.

This press release contains statements that are forward-looking. These statements are based on current expectations that are subject to risks and uncertainties. Actual results will vary because of factors such as PC shipment growth; technological shifts; customer demand; competitive products and pricing; product mix; product ship schedules; life cycles; terms and conditions; litigation; and other issues discussed in the company’s Form 10-K and other SEC filings.

Founded in 1975, Microsoft (Nasdaq
) is the worldwide leader in software, services and Internet technologies for personal and business computing. The company offers a wide range of products and services designed to empower people through great software — any time, any place and on any device.


Microsoft, Windows, Windows NT and MSN, are either registered trademarks or trademarks of Microsoft Corp. in the United States and/or other countries.

The names of actual companies and products mentioned herein may be the trademarks of their respective owners.

For more information, financial analysts only:

Carla Lewis, senior director, Investor Relations (425) 936-3703

For more information, press only:

Caroline Boren, Waggener Edstrom, (425) 637-9097,
Katy Fonner, Waggener Edstrom, (503) 443-7000,

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