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Despite posting a $10bn quarter, Microsoft offered a more cautious outlook for the next three months.

The company took a profit of $2.99bn from its Q4 2005 period, down slightly from the corresponding period last year, after accounting for $756m in antitrust related legal charges. Total revenue was $10.16bn

All segments grew, but executives seemed most pleased with a 22 per cent increase in the small Home and Entertainment division, mostly related to the Xbox. Xbox2 will ship before Xmas.

Server and tools profits jumped from $608m a year ago to $800m in this quarter. But the two big cash cows were comparatively steady, and Office-related profits actually fell year-on-year. Client profit was comparatively steady at $2.175bn. while the "Information Worker" group recorded $1.997bn in operating income, down from $2.022bn a year ago.

The server, Windows and Office groups account for 84 per cent of Microsoft's revenue and the vast majority of its profits, since the only other group in the black is MSN.

For the year, Microsoft recorded revenue of $39.78bn and a profit of $14.56bn. The company listed its assets at $70bn, down from $94bn, reflecting the $44bn Microsoft has spent on dividends and share buybacks. For Q1 2006, Microsoft said it expected earnings to be slightly lower, between $9.7bn and $9.8bn.®

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