Microsoft reported a year-on-year increase in sales and net profit for its fourth fiscal quarter on Thursday as it benefited from multiyear software subscription deals.
Net profit for the quarter ended June 30 was $1.92 billion, compared with $1.53 billion in the year-ago period, the Redmond, Wash., software vendor said in a statement. This year's figure was reduced by $533 million in after-tax law suit settlement charges, while last year's result included a write-off charge of $806 million, Microsoft said.
Revenue for the quarter was $8.07 billion, up 11 percent from $7.25 billion a year earlier. Growth was driven primarily by multiyear licensing deals for server products and applications such as Office in Microsoft's Information Worker unit, as well as a 25 percent revenue jump at the MSN Internet division, Microsoft said.
The revenue figures beat the $7.88 billion consensus estimate of 20 analysts polled by Thomson First Call.
"The past year was another tough one for our industry. It was characterized by tight IT spending budgets, geopolitical uncertainty and generally weak economic conditions particularly in the euro zone and Japan," Microsoft Chief Financial Officer John Connors said in a conference call.
"Despite all of the challenges we had a very solid year on an absolute basis and very good results relatively speaking. Additionally I would characterize our fourth quarter sales results as encouraging," he said.
Besides profiting from its Licensing 6.0 scheme and the associated Software Assurance plan, Microsoft also benefited from a strong euro and Japanese yen versus the U.S. dollar. International revenue would have been about $255 million less if exchange rates had remained the same as a year ago, the company said.
Revenue at Microsoft's Server Platforms segment rose 17 percent year-on-year to $1.93 billion in the quarter, led by 24 percent growth in Windows Server revenue and 34 percent growth in SQL Server revenue, Microsoft said. In the past quarter, Microsoft launched Windows Server 2003 and introduced the 64-bit edition of SQL Server.
The Information Worker group reported fourth quarter revenue up 8 percent year-on-year to $2.35 billion, fueled by a $102 million increase in revenue from software subscription deals for Office and a $75 million revenue increase for other products in the group including Visio and Project, Microsoft said.
Revenue at the Client group grew 4 percent to $2.53 billion from $2.43 in the year-ago period, driven by PC buyers who continue to select Windows XP Professional edition over the cheaper Home edition, Microsoft said.
At MSN, increased advertising and subscription revenue pushed segment revenue up 25 percent to $559 million compared with last year's fourth quarter. At the same time increased Xbox game console sales helped push revenue at the Home and Entertainment unit up 8 percent compared to last year, to $483 million, Microsoft said.
Aided by the acquisition of Navision A/S last year, revenue at Microsoft Business Solutions rose to $179 million from $86 million last year, Microsoft said.
Revenue at the Mobile and Embedded Devices segment was up to $44 million from last year's $36 million as a result of increased Pocket PC shipments and licensing fees from its MapPoint online mapping service, Microsoft said.
Geographically, Microsoft revenue was up 3 percent in the Americas to $2.99 billion; up 43 percent to $1.75 billion in Europe, the Middle East and Africa, and up 7 percent to $835 million in Japan and the Asia-Pacific region, the company said.
Looking ahead, Microsoft expects revenue for its first quarter to come out between $7.9 billion and $8.1 billion, with earnings per share about $0.23. Last year the company reported first quarter revenue of $7.75 billion. Microsoft's first quarter ends Sept. 30.
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