Feeds

Microsoft's Q3 hurt by settlement costs

Sun puts small dent in golden egg

  • alert
  • submit to reddit

Reducing security risks from open source software

Microsoft celebrated solid revenue growth in its third quarter but felt the pains of recent legal settlements with net income falling year-over-year.

Microsoft reported $9.18bn in revenue for the period ended 31 March. This marks a 17 per cent increase over the $7.84bn posted in the same quarter a year ago.

The company's net income total came in at just $1.32bn. This total includes $501m in after-tax charges for stock-based compensation and $1.89bn in after-tax charges for Microsoft's recent settlement with Sun Microsystems and fines imposed by the European Commission.

In the same quarter last year, Microsoft reported $2.14bn in net income, including a $655m after-tax charge for stock-based compensation.

Microsoft's CFO John Connors steered clear of the charges in a brief statement about the Q3 results.

"Broad-based demand and solid execution across all our businesses drove outstanding results for the quarter," Connors said. "All of our businesses met or exceeded our expectations this quarter with the Client, Information Worker and Server and Tools businesses growing a combined 17 per cent. Overall corporate IT spending continued to improve and we expect to see healthy demand through the end of our fiscal year."

Microsoft clearly took a hit for the $590m fine handed down by the EU, and its $2bn settlement with Sun. The payments, however, did little to stop the cash juggernaut. Microsoft now has $56.4bn in cash and short-term investments compared to $53bn in the previous quarter and $49bn a year ago. Favorable exchange rates helped Microsoft out in the third quarter.

Microsoft's main businesses all showed gains during the quarter. Its client business pulled in $2.9bn versus $2.5bn in the same quarter last year. The server business jumped to $2.2bn from $1.8bn, and the Office business grew to $2.7bn from $2.3bn.

Microsoft's MSN business posted $591m in revenue compared to $508m last year. Online advertising and paid search drove the growth, showing a 43 per cent year-over-year surge in revenue. MSN subscription revenue declined $17m, leaving Microsoft with 8.2m subscriptions.

Its Xbox producing home entertainment biz upped revenue to $530m from $453m. Unit sales of the Xbox increased 30 per cent. Its SMB software group also upped revenue to $153m from $147m.

Mobile sales are still coming along quite slowly. The mobile group generated just $61m in sales compared to $46m last year.

Microsoft expects fourth quarter revenue to come in between $8.9bn and $9.0bn. Full the full year, Microsoft is looking for revenue between $37.8bn and $38.2bn. ®

Related stories

Microsoft sees Judge, looks busy
MS to probe human-computer interface
Birth of the Evil Empire? Snapshots from billg's early days
Microsoft smokes peace pipe with Minnesota plaintiffs
Windows Update groans under patch load
Microsoft charity licence gets lukewarm welcome
Microsoft: May expectations for Longhorn

Mobile application security vulnerability report

More from The Register

next story
BBC goes offline in MASSIVE COCKUP: Stephen Fry partly muzzled
Auntie tight-lipped as major outage rolls on
iPad? More like iFAD: We reveal why Apple fell into IBM's arms
But never fear fanbois, you're still lapping up iPhones, Macs
Nadella: Apps must run on ALL WINDOWS – PCs, slabs and mobes
Phone egg, meet desktop chicken - your mother
White? Male? You work in tech? Let us guess ... Twitter? We KNEW it!
Grim diversity numbers dumped alongside Facebook earnings
HP, Microsoft prove it again: Big Business doesn't create jobs
SMEs get lip service - what they need is dinner at the Club
ITC: Seagate and LSI can infringe Realtek patents because Realtek isn't in the US
Land of the (get off scot) free, when it's a foreign owner
Dude, you're getting a Dell – with BITCOIN: IT giant slurps cryptocash
1. Buy PC with Bitcoin. 2. Mine more coins. 3. Goto step 1
There's NOTHING on TV in Europe – American video DOMINATES
Even France's mega subsidies don't stop US content onslaught
You! Pirate! Stop pirating, or we shall admonish you politely. Repeatedly, if necessary
And we shall go about telling people you smell. No, not really
prev story

Whitepapers

Designing a Defense for Mobile Applications
Learn about the various considerations for defending mobile applications - from the application architecture itself to the myriad testing technologies.
How modern custom applications can spur business growth
Learn how to create, deploy and manage custom applications without consuming or expanding the need for scarce, expensive IT resources.
Reducing security risks from open source software
Follow a few strategies and your organization can gain the full benefits of open source and the cloud without compromising the security of your applications.
Boost IT visibility and business value
How building a great service catalog relieves pressure points and demonstrates the value of IT service management.
Consolidation: the foundation for IT and business transformation
In this whitepaper learn how effective consolidation of IT and business resources can enable multiple, meaningful business benefits.