Microsoft Announces Record Revenue For Fiscal Year 2001

REDMOND, Wash., July 19, 2001 — Microsoft Corp. today announced revenue of $25.30 billion for the fiscal year ended June 30, 2001, a 10 percent increase over the $22.96 billion reported last year. Operating income totaled $11.72 billion compared to $11.01 billion in fiscal 2000. Including the non-cash charge related to investment impairments announced on July 11, diluted earnings per share were $1.32, compared to $1.70 in fiscal 2000.

The company also announced revenue of $6.58 billion for the quarter ended June 30, 2001, a 13 percent increase over the $5.80 billion for the same quarter last year. Operating income was $2.75 billion compared to $2.55 billion for the same quarter last year. Including the non-cash charge related to investment impairments announced on July 11, net income and diluted earnings per share were $66 million and $0.01.

“We reported another quarter of strong revenue growth and operating income results. Even in this challenging economic environment, we saw solid customer enthusiasm for our broad array of products and services, which drove positive growth across all our businesses,”
said John Connors, chief financial officer at Microsoft.
“We are entering fiscal 2002 with a lineup of groundbreaking new products like Office XP, Windows® XP, Xbox® and Visual Studio® .NET. However we continue to carefully monitor changes in the global economic environment in light of the impact they may have on our business.”

The Windows family of products had another standout quarter. Windows 2000 Professional experienced particularly strong growth, accounting for 41 percent of all 32-bit Windows operating systems shipped during the quarter, up from 35 percent in the March 2001 quarter.
“Windows 2000 Professional turned in another incredible performance, and license sales of the Windows family of desktop operating systems exceeded $2 billion for the third consecutive quarter,”
said Jim Allchin, group vice president at Microsoft.
“With the upcoming launch of Windows XP on October 25, we have a huge opportunity to deliver a new set of breakthrough experiences for home and business users.”

Stellar performances by Microsoft® SQL Server™
2000 and Exchange 2000 Server in the quarter drove record revenue results for Microsoft’s enterprise server and services business. Demand for these products and other members of the .NET Enterprise Server family continues to accelerate, and a wide range of customers, including Dollar Rent A Car, Scandinavian Airlines System, Hard Rock Cafe and Continental Airlines, are currently using them to build state-of-the-art enterprise and Internet-based commercial applications. During the quarter, Microsoft also announced the public availability of Mobile Information 2001 Server, which extends enterprise information, and corporate intranet applications and services to mobile users.

Office XP, the newest version of the award-winning Office business productivity suite, became widely available on May 31, 2001. Deployments of Office XP by enterprise customers such as Timex,, Turner Broadcasting Systems, Inc., and Columbia Sportswear Company are a testament to the business value that Office XP delivers by providing a smarter work experience for individuals, teams and organizations.

On May 16, 2001, at the Electronics Entertainment Expo, Microsoft announced that Xbox, the highly anticipated future-generation video game system, would be available in North America on November 8, 2001, at an estimated retail price* of $299. Microsoft also announced that 27 leading video game companies, including Electronic Arts, Sega Corp., Namco Limited and Konami, will develop games that take advantage of the built-in, high-speed broadband capabilities that Xbox will offer to deliver a revolutionary online gaming experience.

Business Outlook

Management offers the following guidance for the quarter ending September 30, 2001:

  • Revenue is expected to be in the range of $6.0 billion and $6.2 billion.

  • Diluted earnings per share is expected to be $0.39 or $0.40.

Management offers the following guidance for the full fiscal year ending June 30, 2002:

  • Revenue is expected to be in the range of $28.8 billion and $29.5 billion.

  • Diluted earnings per share is expected to be in the range of $1.91 to $1.95.

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: entry into new markets with entrenched competitors, market acceptance of new products and services, continued acceptance of existing products and services, delays in product development, reliance on sole source suppliers, or shortages of key components for hardware products that delay product delivery, any of which may cause revenues and income to fall short of anticipated levels; the risk of obsolete inventory or product returns by distributors, resellers and retailers; the risk of warranty claims on hardware products; higher relative marketing expenses associated with new product releases; changes in the rate of PC shipments; technological shifts; customer demand for our product and services; the support of third party software developers for new or existing platforms; competitive products, services and pricing; changes in product and service mix; product life cycles; our ability to efficiently integrate acquired businesses; implementation of cost structures that align with revenue growth; the financial condition of vendors, resellers and retailers; unavailability of insurance; adverse results in litigation; general economic conditions that affect demand for computer hardware or software; 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; and other factors discussed in the
“Management Discussion and Analysis”
section of the Company’s 2000 Form 10-K and other reports and filings with the Securities and Exchange Commission.

Webcast Details

Microsoft will hold an audio webcast at 2:30 p.m. PDT (5:30 p.m. EDT) today 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 . The webcast will be available for replay through the close of business on Friday, July 27, 2001.

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, Xbox and Visual Studio, 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.

*Reseller prices may vary.

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) 638-7000, [email protected]
Katy Fonner, Waggener Edstrom, (503) 443-7000, [email protected]

Note to editors: If you are interested in viewing additional information on Microsoft, please visit the Microsoft Web page at on Microsoft’s corporate information pages. Shareholder and financial information as well as today’s 2:30 p.m. PDT conference call with investors and analysts is available at .

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