Microsoft Announces Record Second Quarter Results

Redmond, Washington — January 18, 1996 — Microsoft Corporation today announced second-quarter revenues of $2.2 billion, a 48% increase over the same quarter a year ago.

Net income for the quarter equaled $575 million, up 54% over last year. Earnings per share totaled $.90, composed of $.87 in earnings from operations plus a one-time non-recurring net gain of $.03 per share from the disposition of long-term assets. Earnings from operations of $.87 represented a 45% increase compared to the $.60 earned during the same quarter last year.

“This has been another strong quarter for our company,” observed Bob Herbold, Microsoft’s chief operating officer. “These record results reflect the continuing adoption of the full range of our products by customers worldwide.”

“Momentum continues to build across all markets for both the Microsoft Windows 95 and Microsoft Windows NT operating systems,” noted Paul Maritz, group vice president, platforms group. “The migration to these 32-bit platforms means more robust performance from the operating systems, higher productivity from desktop applications, and the development of new, more powerful client-server business applications.”

“The strength of our 32-bit operating systems and applications products across the board was reflected in our operating results,” affirmed Mike Brown, chief financial officer. “Revenues from our BackOffice suite of products doubled over the same quarter of the prior year. OEM had another record quarter, with revenues of $672 million, up 75% over the same quarter of the prior year. Internationally, the enthusiasm for Microsoft Windows 95 carried into Japan, with the successful introduction of the Kanji version of the product.”

In advance of the holiday season, the consumer division introduced many new products — including the Encarta 96 World Atlas, the Microsoft Fury3 game and the Microsoft SideWinder joystick — and also reduced prices on its family of best-selling home software products. “We’re pleased with how the combination of new products and new pricing fueled the expansion of our business this quarter,” noted Patty Stonesifer, senior vice president, consumer division. “SideWinder is off to a roaring start. Microsoft Automap travel series has secured its position as a leader in the fast-growing mapping category. And with the Encarta 96 World Atlas we have successfully extended our hugely popular Microsoft Encarta franchise.”

In other important news from the quarter related to the Internet, Microsoft unveiled the details of its long-term strategy at Internet Strategy Day on December 7th, outlining the company’s wide-ranging commitment to embracing and extending the Internet by integrating our products with this rapidly emerging public network. In addition, Microsoft announced joint ventures with NBC to create a 24-hour news and information channel and an interactive online news service. This week, Microsoft also announced the acquisition of Vermeer Technologies, Inc., creators of FrontPage and a pioneer of visual, standards-based publishing tools for the World Wide Web.

Founded in 1975, Microsoft (NASDAQ “MSFT”) is the worldwide leader in software for personal computers. The company offers a wide range of products and services for business and personal use, each designed with the mission of making it easier and more enjoyable for people to take advantage of the full power of personal computing every day.

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