Microsoft’s Annual Revenue Reaches $60 Billion

REDMOND, Wash. — July 17, 2008 — Microsoft Corp. today announced revenue of $15.84 billion for the fiscal fourth quarter ended June 30, 2008, an 18% increase over the same period of the prior year. Operating income and diluted earnings per share for the quarter were $5.68 billion and $0.46, representing growth of 42% and 48%, respectively, over the same period of the prior year.

For the fiscal year ended June 30, 2008, Microsoft announced revenue of $60.42 billion, an 18% increase over the prior year. Operating income and diluted earnings per share for the year were $22.49 billion and $1.87, representing yearly growth of 21% and 32%, respectively.

The growth rates for operating income and diluted earnings per share were impacted by a $1.1 billion charge in the fourth quarter of fiscal year 2007 related to the expansion of the company’s Xbox 360 warranty coverage.

“Delivering $60 billion in annual revenue is an outstanding accomplishment and a testament to the powerful combination of great technology solutions and strong execution by our partners and global sales and marketing teams,” said Kevin Turner, chief operating officer at Microsoft.  “The outlook for fiscal year 2009 is positive given the breadth of our impressive technology portfolio and the expanding collection of online services we are bringing to market.”

This fiscal year marked the launch of Microsoft’s flagship server products: Windows Server 2008, SQL Server 2008 and Visual Studio 2008. Revenue growth was primarily driven by continued customer demand for all products, including Windows Vista, which has sold over 180 million licenses since launch, the 2007 Microsoft Office system, server software, and Xbox 360 consoles and games.

“We had a strong finish in the fourth quarter, which capped off an impressive year for the company. We grew revenue 18% for the year with earnings per share significantly outpacing that,” said Chris Liddell, chief financial officer at Microsoft.  “Looking forward, despite difficult economic conditions, we will build upon the momentum exiting fiscal year 2008 and expect to deliver another year of double-digit revenue and earnings growth in fiscal year 2009.”

Business Outlook

Microsoft management offers the following guidance for the quarter ending September 30, 2008:

  • Revenue is expected to be in the range of $14.7 billion to $14.9 billion.

  • Operating income is expected to be in the range of $5.9 billion to $6.0 billion.

  • Diluted earnings per share are expected to be $0.47 or $0.48.

Management offers the following guidance for the full fiscal year ending June 30, 2009:

  • Revenue is expected to be in the range of $67.3 billion to $68.1 billion.

  • Operating income is expected to be in the range of $26.3 billion to $26.9 billion.

  • Diluted earnings per share are expected to be in the range of $2.12 to $2.18.

Webcast Details

Microsoft will hold an audio webcast at 2:30 p.m. PDT (5:30 p.m. EDT) today with Chris Liddell, senior vice president and chief financial officer, Frank Brod, corporate vice president and chief accounting officer, and Colleen Healy, general manager of Investor Relations, to discuss details of the company’s performance for the quarter and certain 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 July 17, 2009.

About Microsoft

Founded in 1975, Microsoft (Nasdaq “MSFT”) is the worldwide leader in software, services and solutions that help people and businesses realize their full potential.

Forward-Looking Statements

Statements in this release that are “forward-looking statements” are based on current expectations and assumptions that are subject to risks and uncertainties.  Actual results could differ materially because of factors such as:

  • challenges to Microsoft’s business model;

  • intense competition in all of Microsoft’s markets;

  • Microsoft’s continued ability to protect its intellectual property rights;

  • claims that Microsoft has infringed the intellectual property rights of others;

  • the possibility of unauthorized disclosure of significant portions of Microsoft’s source code;

  • actual or perceived security vulnerabilities in Microsoft products that could reduce revenue or lead to liability;

  • government litigation and regulation affecting how Microsoft designs and markets its products;

  • Microsoft’s ability to attract and retain talented employees;

  • delays in product development and related product release schedules;

  • significant business investments that may not produce offsetting increases in revenue;

  • changes in general economic conditions that affect demand for computer hardware or software;

  • adverse results in legal disputes;

  • unanticipated tax liabilities;

  • Microsoft’s consumer hardware or other vertically-integrated hardware and software products may experience quality or supply problems;

  • impairment of goodwill or amortizable intangible assets causing a charge to earnings;

  • exposure to increased economic and regulatory uncertainties from operating a global business;

  • geo-political conditions, natural disaster, cyber-attack or other catastrophic events disrupting Microsoft’s business;

  • acquisitions and joint ventures that adversely affect the business;

  • improper disclosure of personal data could result in liability and harm to Microsoft’s reputation;

  • outages and disruptions of online services if Microsoft fails to maintain an adequate operations infrastructure;

  • sales channel disruption such as the bankruptcy of a major distributor; and

  • Microsoft’s ability to implement operating cost structures that align with revenue growth.

For further information regarding risks and uncertainties associated with Microsoft’s business, please refer to the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors” sections of Microsoft’s SEC filings, including, but not limited to, its annual report on Form 10-K and quarterly reports on Form 10-Q, copies of which may be obtained by contacting Microsoft’s Investor Relations department at (800) 285-7772 or at Microsoft’s Investor Relations Web site at http://www.microsoft.com/msft.

All information in this release is as of July 17, 2008. The company undertakes no duty to update any forward-looking statement to conform the statement to actual results or changes in the company’s expectations.

For more information, financial analysts and investors only:

Colleen Healy, general manager, Investor Relations, (425) 706-3703

Note to editors: If you are interested in viewing additional information on Microsoft, please visit the Microsoft Web page at http://www.microsoft.com/presspass on Microsoft’s corporate information pages. Web links, telephone numbers and titles were correct at time of publication, but may since have changed. Shareholder and financial information, as well as today’s 2:30 p.m. PDT conference call with investors and analysts, is available at http://www.microsoft.com/msft.