Feeds

Investors' hopes rise as Microsoft's Q4 profit falls

Buyback Mountain

Providing a secure and efficient Helpdesk

Microsoft today erased investor worries over a 24 per cent drop in fourth quarter profits by announcing a massive stock buyback program and bullish results for its fiscal year.

Redmond's fourth quarter revenue came in at $11.80bn - a 16 per cent year-over-year increase. The revenue gains, however, were offset by the large profit dip. Microsoft's profit slipped to $2.83bn or 28 cents per share from the $3.7bn or 34 cents per share reported last year. Microsoft's operating expenses rose more than 10 per cent, as the company shelled out cash to catch up to Google in the search game and correct product delays.

As usual, Microsoft's bottom line was also hurt by legal settlements. This time around Microsoft chalked up $351m in legal charges as a result of a European Commission fine. Last year, Microsoft had to pay $756m in legal charges. But, when you're posting a $3bn profit, who cares?

Riding Buyback

Microsoft looks to please investors by putting its cash horde to good use. The company plans to buy back up to $40bn of stock via a $20bn tender offer and a $20bn five-year share repurchase plan.

Investors were tickled again when Microsoft's CFO Chris Liddell promised "strong, double-digit revenue growth" in this fiscal year. With Vista and a revamped Office on its side, the company expects full-year 2007 revenue to come in between $49.7bn and $50.7bn. In the nearer term, Microsoft forecasted a first quarter revenue total between $10.6bn and $10.8bn.

Some close software watchers wanted Microsoft to dish out specific revenue goals for Vista and Office. Liddell declined to provide such detail. Instead, he simply reiterated a November release of Vista to businesses, a January release to consumers and an Office release in the "beginning of next year."

Bleeding MSN

Looking back to the fourth quarter, we find Microsoft's client business humming along as usual. Client software revenue rose from $3bn in last year's fourth quarter to $3.4bn. This business also provided Microsoft with $2.5bn in income up from $2.2bn.

The server and tools unit performed even better with revenue rising to $3.2bn from $2.7bn. This unit posted income of $1.2bn - up from $814m.

Information worker revenue rose to $3.1bn from $2.9bn and offered up net income of $2.2bn - up from $2bn.

Microsoft's home and entertainment business enjoyed a large rise in revenue, reaching $1.1bn in this year's fourth quarter as compared to $587m last year. The unit's loss, however, swelled to $414m from $201m.

The MSN unit also posted a loss of $190m on revenue of $580m. That compares to a profit of $101m on revenue of $598m last year.

For the fiscal year ended June, 30, Microsoft reported an 11 per cent rise in revenue to $44.28bn.

Shares of Microsoft rose more than 5 per cent in after-hours trading, following the release of the financial report. ®

Beginner's guide to SSL certificates

More from The Register

next story
Scrapping the Human Rights Act: What about privacy and freedom of expression?
Justice minister's attack to destroy ability to challenge state
WHY did Sunday Mirror stoop to slurping selfies for smut sting?
Tabloid splashes, MP resigns - but there's a BIG copyright issue here
Hey Brit taxpayers. You just spent £4m on Central London ‘innovation playground’
Catapult me a Mojito, I feel an Digital Innovation coming on
Google hits back at 'Dear Rupert' over search dominance claims
Choc Factory sniffs: 'We're not pirate-lovers - also, you publish The Sun'
EU to accuse Ireland of giving Apple an overly peachy tax deal – report
Probe expected to say single-digit rate was unlawful
Inequality increasing? BOLLOCKS! You heard me: 'Screw the 1%'
There's morality and then there's economics ...
While you queued for an iPhone 6, Apple's Cook sold shares worth $35m
Right before the stock took a 3.8% dive amid bent and broken mobe drama
EU probes Google’s Android omerta again: Talk now, or else
Spill those Android secrets, or we’ll fine you
prev story

Whitepapers

Forging a new future with identity relationship management
Learn about ForgeRock's next generation IRM platform and how it is designed to empower CEOS's and enterprises to engage with consumers.
Storage capacity and performance optimization at Mizuno USA
Mizuno USA turn to Tegile storage technology to solve both their SAN and backup issues.
The next step in data security
With recent increased privacy concerns and computers becoming more powerful, the chance of hackers being able to crack smaller-sized RSA keys increases.
Security for virtualized datacentres
Legacy security solutions are inefficient due to the architectural differences between physical and virtual environments.
A strategic approach to identity relationship management
ForgeRock commissioned Forrester to evaluate companies’ IAM practices and requirements when it comes to customer-facing scenarios versus employee-facing ones.