What was Microsoft's revenue and net income performance for the quarter?

For the three months ended December 31, 2005, Microsoft reported revenue of $11.837 billion, a 9% increase year-over-year. Net income was $3.653 billion, or $0.34 per diluted share, up from $3.463 billion, or $0.32 per diluted share, in the same period last year.

How is Microsoft managing its capital and shareholder returns?

Microsoft continues its robust share repurchase program, buying back approximately 283 million shares for $7.67 billion in the quarter, with about $11.3 billion remaining under its $30 billion plan. The company also declared a regular quarterly dividend of $0.09 per share, demonstrating a commitment to returning capital to shareholders.

Which business segments showed the strongest performance?

The Server and Tools segment saw a 14% revenue increase, boosted by the launch of SQL Server 2005. The Home and Entertainment segment revenue grew by 13%, largely driven by the introduction of the Xbox 360 console. The Client segment also showed positive growth.

Are there any significant legal or regulatory issues impacting Microsoft?

Yes, Microsoft is involved in ongoing competition law investigations in Europe and Korea. In December 2005, the Korean Fair Trade Commission issued a ruling with potential remedies and fines, which Microsoft plans to appeal. The European Commission also issued a Statement of Objections regarding compliance with a prior decision, which Microsoft is contesting. These matters could potentially lead to fines or new obligations impacting product design and distribution.

MSFT 10-Q Quarterly Report Q2 FY2006 — Revenue, Net Income, EPS

Summary

Microsoft Corporation reported strong revenue growth of 9% year-over-year for the third quarter of fiscal year 2006, reaching $11.84 billion, and an 8% increase for the first six months to $21.58 billion. While operating income saw a slight decrease of 2% for the quarter to $4.66 billion, it increased by 6% for the six-month period to $8.70 billion, driven by higher revenue in key segments like Server and Tools, and Client. The company saw significant growth in its Server and Tools segment, largely attributed to the launch of SQL Server 2005, and robust performance in the Client segment driven by Windows operating system licensing. The Home and Entertainment segment experienced a notable increase in revenue, primarily due to the launch of the Xbox 360 console. Microsoft continues its aggressive share repurchase program, with approximately $11.3 billion remaining under its $30 billion plan, which is expected to be completed by December 2006. The company also declared a regular quarterly dividend of $0.09 per share. Despite facing ongoing legal and regulatory challenges, particularly in Europe and Korea concerning competition law, Microsoft maintains a strong financial position with substantial cash and short-term investments, signaling a stable outlook for continued operations and dividend payments.

Key Highlights

1Revenue for the three months ended December 31, 2005, was $11.837 billion, an increase of 9% compared to $10.818 billion in the prior year period.
2Net income for the three months ended December 31, 2005, was $3.653 billion, or $0.34 per diluted share, compared to $3.463 billion, or $0.32 per diluted share, in the prior year period.
3Operating income for the three months ended December 31, 2005, was $4.657 billion, a decrease of 2% from $4.749 billion in the prior year period.
4The company repurchased approximately 283 million shares for $7.67 billion during the quarter under its $30 billion repurchase program, with approximately $11.3 billion remaining.
5The Home and Entertainment segment revenue increased 13% to $1.556 billion, driven by the launch of the Xbox 360 console.
6Server and Tools segment revenue increased 14% to $2.907 billion, supported by the launch of SQL Server 2005.
7Unearned revenue stood at $8.838 billion as of December 31, 2005, reflecting billings for future software and service delivery.

MICROSOFT CORP Quarterly Report for Q2 Ended Dec 31, 2005

Summary

Key Highlights

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