REDMOND, Wash., July 11, 2001 — Microsoft Corp. said today it expects to report a net investment loss of $2.6 billion in the fourth fiscal quarter of 2001 primarily due to a $3.9 billion pre-tax non-cash charge resulting from the impairment of certain publicly traded and private equity securities, particularly in the cable and telecommunications industries. As required under generally accepted accounting principles, Microsoft regularly monitors and evaluates the realizable value of its investments. If events and circumstances indicate that the decline in value of these assets is other-than-temporary, Microsoft records a charge to investment income.
“Generally accepted accounting principles require that we recognize this charge at this time, but we remain steadfast in our commitment to the strategic business relationships that our long-term investments continue to support,”
said John Connors, chief financial officer.
Microsoft also announced that it expects to report revenue in the fourth fiscal quarter in the range of $6.50 to $6.60 billion, somewhat higher than management’s previously expected range of $6.30 to $6.50 billion. Additionally, management expects results from operations to be in line with previous guidance. Including the non-cash charge, diluted earnings per share is expected to be approximately $0.01.
“Core revenue growth for the quarter was strong and reflects consumer enthusiasm for our products and services despite a slowing economy,”
Connors said.
“With the recent launch of Office XP and the upcoming launches of Windows XP and Xbox, we are excited to see another strong product cycle for the company underway. We will provide a more complete analysis of the June quarter, and further details about our plans for fiscal year 2002, when we announce earnings next week.”
The company will report full details of the financial results for the fourth fiscal quarter and full fiscal year in a press release after the market closes on Thursday, July 19, 2001. The company will also hold its regularly scheduled conference call to discuss the results.
Earnings Release Webcast Details
Microsoft will hold an audio webcast at 2:30 p.m. PDT (5:30 p.m. EDT) on Thursday, July 19, 2001, with John Connors to discuss additional details regarding the company’s performance for the quarter and other forward-looking information. The session may be accessed at http://www.microsoft.com/msft/ . The webcast will be available for replay through the close of business on Friday, July 27, 2001.
These statements are based on current expectations that are based on assumptions that are subject to risks and uncertainties. Actual results could differ materially because of factors such as: general economic conditions; changes in the rate of PC shipments; technological shifts; customer demand; market acceptance of new products and services; competitive products, services and pricing; changes in product and service mix; delay in product ship schedules; product life cycles; currency fluctuations; sale terms and conditions; financial market volatility affecting the value of our investments that may result in a reduction in carrying value and recognition of losses; litigation; and other factors discussed in the Company’s 2000 Form 10-K and other reports and filings with the Securities and Exchange Commission.
Founded in 1975, Microsoft (Nasdaq
“MSFT”
) 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.
