Microsoft reports record revenue

US software colossus Microsoft had record revenue of $11.84 billion for the financial quarter that ended on 31 December 2005, according to the company.

    This has been Microsoft's best single-quarter revenue to date

    The figure released on Thursday represented Microsoft's best single-quarter revenue to date and was a 9% increase over the same quarter a year earlier.

    Earnings per share were 33 cents, as forecast, while net earnings were $3.65bn, according to the company.

    A company statement blamed a 2% drop in operating income on missed sales targets for the new Xbox 360 as well as marketing and product development expenses associated with major product launches.

    "The growth in our core businesses was healthy during the quarter, driven by strength in Server and Tools and the success of our Windows Client products in a robust PC market," Microsoft chief financial officer Chris Liddell said in a written statement.

    "The quarter also marked the beginning of an important product cycle for Microsoft with the launches of Xbox 360, SQL Server 2005, Visual Studio 2005 and Microsoft Dynamics CRM 3.0, all of which were extremely successful and well received by our customers."

    Operating income

    Operating income is significant to note because Microsoft sells Xbox consoles at a loss, said analyst Matt Rosoff of Directions On Microsoft in Washington state.

    "The idea being that, over the life of the business, they make their money off software and peripherals," Rosoff said.

    Microsoft plans to invest in its
    search engine and Ad Center

    A large number of Xboxes were sold since the new generation was released last year, but not the number Microsoft expected, Liddell said.

    Microsoft expected to end the current fiscal year with revenue in the range of $44bn to $44.5bn and earnings per share of from $1.28 to $1.31.

    Microsoft planned to invest in its search engine MSN and "ramp-up" its Ad Center, an online advertising platform intended to end its use of internet rival Yahoo for the service.

    "We are moving forward on Ad Center and taking control of our own destiny,' Liddell said.

    Microsoft also revealed plans to make unspecified "vertical cquisitions" to enhance Windows Live search.

    SOURCE: Agencies


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