01—Abstract
Summary
Summary of the 10-K filed July 26, 2012. Cited figures are marked; the original filing is the authoritative source.
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 billiona, 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 billionb 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.
02—Key points
Key Highlights
- Revenue increased by 5% to $73.7 billion in fiscal year 2012, primarily driven by Server and Tools and Microsoft Business Divisions.
- Operating income decreased by 20% to $21.8 billion, significantly impacted by a $6.2 billion goodwill impairment charge in the Online Services Division.
- Diluted earnings per share decreased by 26% to $2.00, largely due to the goodwill impairment charge ($0.73 per share impact).
- The Windows & Windows Live Division experienced a 3% revenue decline, influenced by PC market conditions and revenue deferrals for the Windows Upgrade Offer.
- Server and Tools division showed robust growth with a 12% revenue increase, indicating strong enterprise adoption.
- The 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.
- Microsoft 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.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2012, Microsoft Corp kept $0.23.
- Revenue$73.72B100.0%
- Cost of revenue−$17.53B23.8%
- Gross profit$56.19B76.2%
- Operating costs−$34.43B46.7%
- Operating income$21.76B29.5%
- Interest, other & tax−$4.79B6.5%
- Net income$16.98B23.0%
Where FY2012 revenue went
$73.72B- Other operating costs: $24.62B, 33% of revenue
- Cost of revenue: $17.53B, 24% of revenue
- Net income: $16.98B, 23% of revenue
- R&D: $9.81B, 13% of revenue
- Interest, other & tax: $4.79B, 6.5% of revenue
Kept 23% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2012filed July 26, 2012Financial Statements
FY2012 against FY2011
| Line item | FY2012FY2011 | Change |
|---|---|---|
| Revenue | $73.72B$69.94B | +5.4% |
| Cost of Revenue | $17.53B$15.58B | +12.5% |
| Gross Profit | $56.19B$54.37B | +3.4% |
| R&D Expenses | $9.81B$9.04B | +8.5% |
| Operating Expenses | $34.43B$42.78B | −19.5% |
| Operating Income | $21.76B$27.16B | −19.9% |
| Interest Expense | $380.00M$295.00M | +28.8% |
| Net Income | $16.98B$23.15B | −26.7% |
| EPS (Basic) | $2.02$2.73 | −26.0% |
| EPS (Diluted) | $2.00$2.69 | −25.7% |
| Shares Outstanding (Basic) | 8.40B8.49B | −1.1% |
| Shares Outstanding (Diluted) | 8.51B8.59B | −1.0% |
05—Questions
Frequently Asked Questions
What was the primary driver of Microsoft's revenue growth in FY2012?
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.
What significant charge impacted Microsoft's profitability in FY2012?
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.
How did the Windows division perform, and what factors influenced its results?
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.
What is Microsoft's outlook and investment strategy for future growth?
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.
How is Microsoft returning capital to shareholders?
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.
06—Continue