Microsoft Announces Quarterly Revenue and Income

REDMOND, Wash., April 20, 2000 — Microsoft Corp. today announced revenue of $5.66 billion for the quarter ended March 31, 2000, a 23 percent increase over $4.60 billion for the same quarter last year. Net income and diluted earnings per share were $2.39 billion and $0.43, a 23 percent increase over the $0.35 diluted earnings per share reported for the corresponding quarter last year.

“OEM revenue was light as demand for business PCs remained slow in the quarter, and we remain guarded about near-term growth,” said John Connors, chief financial officer, at Microsoft. “However, PC demand appeared to pick up late in the quarter, and with the launch of Windows® 2000, we are excited about the opportunity to help customers migrate to this new generation of platform products.”

On Feb. 17, 2000, Microsoft announced the broad availability of Windows 2000 Professional, Server and Advanced Server in more than 60 countries and 16 languages. The Microsoft® Windows 2000 family of operating systems offers the best client platform for business desktops and laptops and is the infrastructure of choice for building the most robust and demanding Internet based e-commerce applications. To date hundreds of organizations, including General Motors Corp., Ford Motor Co., Wells Fargo Bank, Siemens, and Aventis have deployed or are in the process of deploying Windows 2000 and its Active Directory TM service, and already are benefiting from lower total cost of ownership and superior levels of performance and manageability.

“We already have exceeded 1.5 million Windows 2000 shipments since the launch, and feedback from customers has been incredible,” said Jim Allchin, group vice president, Platforms Group, at Microsoft. “Windows 2000 is the ideal platform for business on the Internet whether accessing content, creating content, or hosting applications and content. It takes advantage of today’s state-of-the-art hardware, from small mobile devices to the largest e-commerce servers with the dependability that customers expect.”

Demonstrating the unprecedented scalability and performance gains of Windows 2000, Microsoft announced a world-record benchmark of 227,079 transactions per minute for Windows 2000 Advanced Server and a pre-release version of Microsoft SQL Server 2000 running on 12 Compaq eight-way ProLiant systems. This result is almost twice as fast as the nearest competitor at one-fourth the cost, for any hardware, operating system or database.

“We are constantly seeking ways in which our software can be used to fuel new and exciting opportunities for industry partners,” said Steve Ballmer, president and CEO at Microsoft. “With Windows 2000 as the foundation for a new generation of products and services, partners are now uniquely positioned to go to market with the best end-to-end, integrated platform for creating both B2B and consumer e-commerce solutions.”

Infrastructure solutions powered by Microsoft’s platform technologies continued to gain significant momentum in linking businesses via secure, Internet-based trading exchanges. The Boeing Co., Lockheed Martin Corp., Raytheon Co., British Aerospace, and CommerceOne Inc. announced the formation of a global business-to-business (B2B) exchange in the aerospace industry using the Windows DNA 2000 platform. Also in the quarter, Radiant Systems Inc. announced plans to develop an integrated Web-based management system and supply chain solution for retailers that will be powered by Microsoft Windows 2000, and feature Microsoft Internet services such as the bCentral TM small business portal, Passport, MSN TM Search, and the Hotmail® Web-based e-mail service. These announcements showcase Microsoft’s ability to achieve the very highest in scalability, reliability and integration across the entire spectrum of trading partners.

Microsoft and Andersen Consulting announced a broad agreement to address the needs of enterprise customers, including the formation of a joint venture service organization named Avanade, which is subject to regulatory approval. Avanade will focus on delivering Internet-specific enterprise solutions based on Windows 2000. Andersen Consulting will also train 25,000 professionals and create a dedicated Microsoft Solution Organization to design and deliver large-scale business solutions based on Microsoft’s enterprise platform. Both companies will jointly develop marketing programs targeted at Fortune 500 companies, new market entrants and Internet startups.

The MSN network of Internet services continued to experience significant growth in the quarter and further established itself as the premier destination for consumers using the Everyday Web to get things done any time, anywhere, and from any type of device. According to Media Metrix, in February 2000 more customers spent more time using the consolidated set of MSN Web sites than ever before. Also in the quarter, Compaq Computer Corp. announced the “Compaq.Net powered by MSN” service, which will offer a customized set of MSN services deeply integrated with the Compaq Presario line of consumer PCs.

MSN also launched MSN Mobile 2.0, a two-way wireless information service that extends MSN Hotmail, MSN MoneyCentral TM personal finance online service, Expedia.com TM online travel service and other MSN services to wireless customers from a wide range of handheld devices. Microsoft announced agreements with Nextel Communications Inc. and AirTouch Cellular Inc., which began offering MSN Mobile 2.0 as part of their services in April 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; the residual impact that year 2000 issues may have on demand for Microsoft’s products and services; terms and conditions; litigation; and other issues discussed in the company’s Form 10-K.

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.

Microsoft, Windows, Active Directory, bCentral, MSN, Hotmail, and MoneyCentral, are either registered trademarks or trademarks of Microsoft Corp. in the United States and/or other countries.

Expedia and Expedia.com are either registered trademarks or trademarks of Expedia Inc. in the United States and Canada.

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, carolineb@wagged.com

Katy Fonner, Waggener Edstrom, (503) 443-7000, kfonner@wagged.com

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. Shareholder and financial information as well as today’s 2:30 p.m. PDT conference call with financial analysts is available at http://www.microsoft.com/msft/ .

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