10-KPeriod: FY2012

MICROSOFT CORP Annual Report, Year Ended Jun 30, 2012

Filed July 26, 2012For Securities:MSFT

Summary

Microsoft Corporation's 2012 10-K filing reveals a company with diversified revenue streams, though facing challenges in its Windows division. Revenue grew to $73.7 billion, driven by strong performance in Server and Tools and the Microsoft Business Division (driven by Office). However, the Windows division saw a revenue decline, partly due to the PC market's slower growth and a revenue deferral related to the Windows Upgrade Offer. The company also experienced a significant operating loss in its Online Services Division due to a $6.2 billion goodwill impairment charge, primarily related to the aQuantive acquisition, impacting overall profitability for the year. Microsoft continues to invest heavily in R&D, particularly in cloud computing and smart connected devices, signaling its strategic focus on future growth areas.

Financial Highlights

55 data points
Beta

Revenue

$73.72B

76.2% Gross Margin

Net Income

$16.98B

23.0% Net Margin

EPS (Diluted)

$2.00

Total Assets

$121.27B

Cash & Equivalents

$6.94B

Free Cash Flow

$29.32B

Financial Statements
Beta
Revenue$73.72B
Cost of Revenue$17.53B
Gross Profit$56.19B
R&D Expenses$9.81B
Operating Expenses$34.43B
Operating Income$21.76B
Interest Expense$380.00M
Net Income$16.98B
EPS (Basic)$2.02
EPS (Diluted)$2.00
Shares Outstanding (Basic)8.40B
Shares Outstanding (Diluted)8.51B

Key Highlights

  • 1Revenue increased by 5% to $73.7 billion in fiscal year 2012, primarily driven by Server and Tools and Microsoft Business Divisions.
  • 2Operating income decreased by 20% to $21.8 billion, significantly impacted by a $6.2 billion goodwill impairment charge in the Online Services Division.
  • 3Diluted earnings per share decreased by 26% to $2.00, largely due to the goodwill impairment charge ($0.73 per share impact).
  • 4The Windows & Windows Live Division experienced a 3% revenue decline, influenced by PC market conditions and revenue deferrals for the Windows Upgrade Offer.
  • 5Server and Tools division showed robust growth with a 12% revenue increase, indicating strong enterprise adoption.
  • 6The company repurchased $5.0 billion in stock and declared $6.7 billion in dividends in fiscal year 2012, demonstrating a commitment to returning capital to shareholders.
  • 7Microsoft acquired Skype in October 2011 for $8.6 billion, integrating it across its divisions and driving growth in the Entertainment and Devices segment, though it contributed to the Online Services Division's impairment.

Frequently Asked Questions

Microsoft's revenue grew to $73.7 billion, with the Server and Tools division and the Microsoft Business Division (driven by Office) showing strong performance. The acquisition of Skype also contributed to revenue, particularly within the Entertainment and Devices segment.

Microsoft recorded a substantial $6.2 billion goodwill impairment charge in its Online Services Division. This non-cash charge was primarily related to goodwill from the 2007 acquisition of aQuantive, due to lower-than-expected future growth and profitability in that segment.

The Windows & Windows Live Division saw a 3% decrease in revenue. This was attributed to a relatively flat PC market, a greater proportion of PC sales in emerging markets with lower average selling prices, and a $540 million revenue deferral related to the Windows Upgrade Offer for Windows 8.

Microsoft is strategically investing in cloud computing and smart connected devices. Key initiatives include the development of Windows 8, Surface devices, and cloud-based services like Office 365 and Windows Azure. The company aims to provide a unified and seamless experience across various devices.

In fiscal year 2012, Microsoft repurchased approximately $5.0 billion of its common stock and declared dividends totaling $6.7 billion. The company has an ongoing share repurchase program authorized up to $40.0 billion, with $8.2 billion remaining as of June 30, 2012.