From the NY Times:
Microsoft’s Profit Rises Despite Xbox Charge
By LAURIE J. FLYNN
Published: July 20, 2007
Microsoft reported fourth-quarter earnings today that matched Wall Street’s forecasts after accounting for a substantial charge for fixing defects in its Xbox video game machine.
The company, the world’s largest software maker, said the strong performance was fueled by brisk sales of Windows Vista and the newest release of Microsoft Office.
Microsoft’s profit for the quarter was $3.04 billion, or 31 cents a share, compared with $2.83 billion, or 28 cents a share, in the same quarter last year. Without the charge, earnings were 39 cents a share, a 26 percent increase over the same period last year.
Revenue was $13.37 billion for the quarter ended June 30, a 13 percent increase from the $11.8 billion in the same period last year.
Analysts had forecast a profit of 39 cents a share on $13.28 billion in revenue, according to Thomson Financial.
The results were announced after the stock market’s close. Microsoft shares were up slightly in after-hours trading, after rising 59 cents a share to close at $31.51 in regular trading.
For the fiscal year, Microsoft posted revenue of $51.12 billion, a 15 percent increase over the prior year. Earnings for the year were $1.42 a share, or $1.49 a share excluding one-time items, marking a 17 percent increase over the year before.
“Our results this quarter cap off an extremely strong fiscal year for the company,” said Chris Liddell, chief financial officer at Microsoft. He predicted double-digit revenue and earnings growth in the current fiscal year.
Investors were relieved last quarter to learn that Microsoft’s core products — the Windows operating system, Office productivity programs and, increasingly, Microsoft’s server software — all showed strong momentum, and that trend appears to have continued through the fourth quarter. Revenue in the business unit that includes Windows sales increased 14 percent to $3.81 billion in the fourth quarter.
The company said earlier this month that it would take a charge of up to $1 billion for the anticipated cost of repairing a hardware defect in some of its Xbox 360 game consoles. As many as a third of the 11.6 million units sold may be affected.
Earlier this week, Microsoft announced that its top gaming executive, Peter Moore, was leaving Microsoft to run the sports division of Electronic Arts, the independent video game publisher, though company executives denied that his departure was related to the Xbox’s engineering problems. Don Mattrick, a former Electronic Arts studio chief, will take Mr. Moore’s job at Microsoft.
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