Feeds

Investors' hopes rise as Microsoft's Q4 profit falls

Buyback Mountain

Build a business case: developing custom apps

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. ®

5 things you didn’t know about cloud backup

More from The Register

next story
Assange™: Hey world, I'M STILL HERE, ignore that Snowden guy
Press conference: ME ME ME ME ME ME ME (cont'd pg 94)
Premier League wants to PURGE ALL FOOTIE GIFs from social media
Not paying Murdoch? You're gonna get a right LEGALLING - thanks to automated software
Caught red-handed: UK cops, PCSOs, specials behaving badly… on social media
No Mr Fuzz, don't ask a crime victim to be your pal on Facebook
Ballmer quits Microsoft board to spend more time with his b-balls
From Clippy to Clippers: Hi, I see you're running an NBA team now ...
Online tat bazaar eBay coughs to YET ANOTHER outage
Web-based flea market struck dumb by size and scale of fail
Kate Bush: Don't make me HAVE CONTACT with your iPHONE
Can't face sea of wobbling fondle implements. What happened to lighters, eh?
Amazon takes swipe at PayPal, Square with card reader for mobes
Etailer plans to undercut rivals with low transaction fee offer
Call of Duty daddy considers launching own movie studio
Activision Blizzard might like quality control of a CoD film
prev story

Whitepapers

5 things you didn’t know about cloud backup
IT departments are embracing cloud backup, but there’s a lot you need to know before choosing a service provider. Learn all the critical things you need to know.
Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Build a business case: developing custom apps
Learn how to maximize the value of custom applications by accelerating and simplifying their development.
Rethinking backup and recovery in the modern data center
Combining intelligence, operational analytics, and automation to enable efficient, data-driven IT organizations using the HP ABR approach.
Next gen security for virtualised datacentres
Legacy security solutions are inefficient due to the architectural differences between physical and virtual environments.