Microsoft Reports First Quarter Earnings for September 2006

REDMOND, Wash. October 26, 2006 Microsoft Corp. today announced first quarter revenue of $10.81 billion for the period ended September 30, 2006, an 11% increase over the same quarter of the prior year. Operating income for the quarter was $4.47 billion, an 11% increase compared with $4.05 billion in the prior year period. Net income and diluted earnings per share for the first quarter were $3.48 billion and $0.35 per share. For the same quarter of the previous year, net income and diluted earnings per share were $3.14 billion and $0.29, including a $0.02 per share charge for certain legal charges.Business Outlook

Microsoft management offers the following guidance for the fiscal second quarter ending December 31, 2006:

  • Revenue is expected to be in the range of $11.8 billion to $12.4 billion, which reflects approximately $1.5 billion of revenue deferrals that will be captured in the fiscal third quarter as noted below.
  • Operating income is expected to be in the range of $2.9 billion to $3.1 billion, which reflects approximately $1.5 billion of deferrals noted below.
  • Diluted earnings per share are expected to be $0.22 to $0.24, which includes an $0.11 per share impact for deferrals noted below.

Note: The guidance above includes the impact of an approximately $1.5 billion of revenue deferral from the second to the third quarter, primarily related to the technology guarantee programs announced on October 24, 2006 for Windows Vista and the 2007 Microsoft Office system.

Management offers the following guidance for the full fiscal year ending June 30, 2007:

  • Revenue is expected to be in the range of $50.0 billion to $50.9 billion.
  • Operating income is expected to be in the range of $19.1 billion to $19.5 billion.
  • Diluted earnings per share are expected to be in the range of $1.43 to $1.46.

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