What were the primary drivers of Microsoft's revenue growth in fiscal year 2002?

Microsoft's revenue grew by 12% to $28.365 billion in fiscal year 2002. The primary drivers were the launch of the Xbox video game system and the strong sales performance of Windows XP Professional and Home operating systems. The company also saw continued growth in its Desktop and Enterprise software segments.

How is Microsoft addressing the challenges posed by the open-source software movement?

Microsoft acknowledges the growing challenge from the open-source model, citing concerns about the lack of single entity responsibility and market incentives for innovation. The company believes its commercial software development (CSD) model offers significant benefits to users. While it sees open-source as a challenge, Microsoft intends to continue emphasizing the value and reliability of its own products.

What is Microsoft's financial position and outlook regarding cash and investments?

Microsoft maintained a very strong financial position, ending fiscal year 2002 with $38.65 billion in cash and short-term investments. The company expects this liquidity, combined with operational cash flow, to be sufficient for its operating requirements, strategic investments, mergers and acquisitions, and share repurchase programs. Microsoft does not currently pay cash dividends.

What significant legal or regulatory issues is Microsoft facing as of this filing?

Microsoft is involved in several significant legal matters. These include ongoing litigation related to antitrust allegations from the U.S. Department of Justice and several state attorneys general, as well as similar actions from competitors like Netscape, Be Incorporated, and Sun Microsystems. The company also faces proceedings from the European Commission concerning interoperability and licensing practices. In fiscal year 2002, Microsoft recorded a contingent liability of approximately $660 million related to consumer class-action lawsuits.

MSFT 10-K FY2002 Annual Report — Revenue, Net Income, EPS

Summary

Microsoft Corporation's 2002 10-K filing reveals a company experiencing robust revenue growth, reaching $28.365 billion for the fiscal year ending June 30, 2002. This growth was propelled by the successful launch of the Xbox gaming console and strong adoption of Windows XP operating systems. The company continues to diversify its offerings across various segments, including Desktop and Enterprise Software, Consumer Software and Devices, and a growing online presence through MSN. Despite facing intense competition and evolving market dynamics, Microsoft demonstrates a strong financial position with significant cash and short-term investments totaling $38.65 billion, indicating substantial financial flexibility for future investments and operations. The filing also highlights Microsoft's strategic focus on innovation, particularly its .NET architecture and the Trustworthy Computing initiative aimed at enhancing security and privacy. While the company navigates challenges such as the rise of open-source software and ongoing legal proceedings, its diversified product portfolio, strong brand recognition, and significant R&D investments position it for continued relevance and growth in the technology sector.

Key Highlights

1Revenue increased to $28.365 billion in fiscal year 2002, up 12% from the prior year, driven by Xbox and Windows XP sales.
2The company ended fiscal year 2002 with substantial cash and short-term investments of $38.65 billion, providing significant financial flexibility.
3Research and development expenses remained high, totaling $4.31 billion in fiscal year 2002, reflecting a continued commitment to innovation and new product development.
4Microsoft launched the Xbox gaming console during fiscal year 2002, contributing to the Consumer Software, Services, and Devices segment's revenue growth.
5The .NET architecture and the Trustworthy Computing initiative are highlighted as key strategic focuses for future product development and security enhancements.
6The company is actively managing its investment portfolio, which experienced significant impairment charges in fiscal years 2001 and 2002 related to telecommunications and cable holdings, but also recognized a gain from the sale of Expedia.
7Microsoft continues to face intense competition across its product lines, including from open-source software and established technology rivals.

MICROSOFT CORP Annual Report, Year Ended Jun 30, 2002

Summary

Key Highlights

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