Feeds

Microsoft halves R&D spending, posts record profits

MSN, Xbox in the black

  • alert
  • submit to reddit

Combat fraud and increase customer satisfaction

Microsoft recorded its highest-ever profits in the last quarter of 2004 (FY 2Q 2005), with net income doubling from $1.5bn a year ago to $3.46bn in the most recent quarter's earnings.

Revenue was up slightly to $10.8bn from $10.15bn in the last three months of 2003. But belt-tightening measures - which included halving Microsoft's R&D outlay, saw the company's net income rocket. Research and development expenditure fell from $2.97bn a year ago to $1.437bn in the most recent quarter. The company also found savings on cost of sales of around $420m, and around $700m in lower from sales and marketing and general expenses costs.

Microsoft said that its home division - which includes Xbox - turned a profit for the first time, as did MSN. Home and Entertainment turned a $397m loss into a $84m profit in the past quarter, on revenues of $1.46bn, $140m higher than last year. Microsoft cited the launch of Xbox live and the game Halo 2, in the Christmas season, with almost one in three Xbox owners snapping up a copy of the game.

However CFO John Connors said that this was a Halo-powered one-off. He warned that Home and Entertainment would lose money in the forthcoming quarter, and said he didn't expect it to make a steady profit until fiscal year 2007.

MSN turned a $130m profit on revenues of $588m. The Mobile and Embedded division, responsible for everything from ATMs to smartphones, is almost in the black: recording a $4m loss on income of $9m.

Boosted by Windows 2003 and Exchange 2003 servers, the Server and Tools division saw income rise by $477 million over the same period last year, to $2.52 billion, of which $913 was clear profit.

But as ever, the divisions responsible for the Windows desktop client and Microsoft Office, the latter Microsoft calls "Information Worker" - remain the breadwinners. The Office division cleared a cool $2bn profit in quarter for the first time on revenues of $2.77bn. Client recorded a net income of $2.53bn, up from $2.095bn in the same period last year, on revenues of $3.22bn, up from $3.059bn. ®

Related stories

Microsoft cruises in Q1
Microsoft's Q3 hurt by settlement costs
Microsoft Q1 profits up

3 Big data security analytics techniques

More from The Register

next story
Dropbox defends fantastically badly timed Condoleezza Rice appointment
'Nothing is going to change with Dr. Rice's appointment,' file sharer promises
Audio fans, prepare yourself for the Second Coming ... of Blu-ray
High Fidelity Pure Audio – is this what your ears have been waiting for?
Did a date calculation bug just cost hard-up Co-op Bank £110m?
And just when Brit banking org needs £400m to stay afloat
Sorry London, Europe's top tech city is Munich
New 'Atlas of ICT Activity' finds innovation isn't happening at Silicon Roundabout
MtGox chief Karpelès refuses to come to US for g-men's grilling
Bitcoin baron says he needs another lawyer for FinCEN chat
Zucker punched: Google gobbles Facebook-wooed Titan Aerospace
Up, up and away in my beautiful balloon flying broadband-bot
Apple DOMINATES the Valley, rakes in more profit than Google, HP, Intel, Cisco COMBINED
Cook & Co. also pay more taxes than those four worthies PLUS eBay and Oracle
prev story

Whitepapers

Top three mobile application threats
Learn about three of the top mobile application security threats facing businesses today and recommendations on how to mitigate the risk.
Combat fraud and increase customer satisfaction
Based on their experience using HP ArcSight Enterprise Security Manager for IT security operations, Finansbank moved to HP ArcSight ESM for fraud management.
The benefits of software based PBX
Why you should break free from your proprietary PBX and how to leverage your existing server hardware.
Five 3D headsets to be won!
We were so impressed by the Durovis Dive headset we’ve asked the company to give some away to Reg readers.
SANS - Survey on application security programs
In this whitepaper learn about the state of application security programs and practices of 488 surveyed respondents, and discover how mature and effective these programs are.