What was the primary reason for filing an amendment to the 10-Q?

The amendment was filed to correct a clerical error in the original filing regarding the amount of unearned revenue and the recognition of unearned revenue for the six months ended December 31, 2001. Management clarified that this correction had no impact on the net cash from operations.

How did the company's profitability change compared to the previous year?

For the six months ended December 31, 2001, net income decreased to $3.57 billion from $4.83 billion in the same period of the prior year. Similarly, diluted earnings per share decreased to $0.64 from $0.91.

What drove the change in investment income/loss?

The company experienced a significant swing in investment income. For the six months ended December 31, 2000, it reported a gain of $1.88 billion. However, for the six months ended December 31, 2001, this turned into a loss of $427 million, primarily due to recognized net losses on investments.

Are there any significant legal or regulatory issues impacting Microsoft?

Yes, Microsoft is a defendant in substantial antitrust litigation, including the U.S. v. Microsoft case, with ongoing proceedings and settlements. Additionally, the European Commission has instituted proceedings concerning interoperability and licensing. The company is also facing numerous overcharge class action lawsuits and a new antitrust suit from Netscape. While Microsoft believes these will not have a material adverse impact, they represent significant ongoing legal challenges.

MSFT 10-Q Quarterly Report Q2 FY2002 — Revenue, Net Income, EPS

Summary

Microsoft Corporation's amended 10-Q filing for the quarter ended December 31, 2001, primarily addresses a clerical error in reporting unearned revenue and its corresponding recognition, with no impact on net cash from operations. Despite this correction, the financial results for the six months ended December 31, 2001, show a decline in net income to $3.57 billion from $4.83 billion in the prior year period, and a decrease in diluted EPS to $0.64 from $0.87. This performance reflects challenges in investment income, which shifted from a gain of $1.88 billion to a loss of $0.43 billion. Investors should note the continued strength in revenue growth, with total revenue increasing to $13.87 billion for the six months ended December 31, 2001, up from $12.32 billion in the prior year. This top-line growth is supported by the Desktop and Enterprise Software and Services segment, which remains the largest contributor. However, the company is navigating significant legal and regulatory landscapes, including ongoing antitrust litigation and investigations, which could pose future risks. The substantial cash and short-term investments position remains a strong point.

Key Highlights

1Revenue for the six months ended December 31, 2001, increased to $13.87 billion from $12.32 billion in the prior year period.
2Net income for the six months ended December 31, 2001, decreased to $3.57 billion from $4.83 billion in the prior year period.
3Diluted Earnings Per Share (EPS) for the six months ended December 31, 2001, declined to $0.64 from $0.91 in the prior year period.
4Investment income shifted significantly, moving from a gain of $1.88 billion for the six months ended December 31, 2000, to a loss of $427 million for the six months ended December 31, 2001.
5The company's cash and short-term investment balance grew to $38.23 billion as of December 31, 2001, up from $31.60 billion at June 30, 2001.
6The 'Desktop and Enterprise Software and Services' segment continues to be the largest revenue generator, with revenue of $11.87 billion for the six months ended December 31, 2001.
7Microsoft is actively involved in significant legal proceedings, including ongoing antitrust litigation and investigations by regulatory bodies, which could impact future operations.

MICROSOFT CORP Quarterly Report (Amendment) for Q2 Ended Dec 31, 2001

Summary

Key Highlights

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