Summary
Microsoft Corporation's (MSFT) 10-Q filing for the period ending September 30, 2006, demonstrates robust financial performance with an 11% increase in revenue to $10.81 billion and a corresponding 11% rise in operating income to $4.47 billion compared to the prior year quarter. This growth was primarily driven by strong sales of the newly launched Xbox 360, increased licensing of SQL Server, Windows Server, and Visual Studio, as well as continued demand for Windows Client operating systems and Microsoft Office. The company's balance sheet reflects a solid liquidity position, though cash and short-term investments saw a decrease from the previous quarter, largely due to significant share repurchase activities. Microsoft continued its aggressive capital return program, repurchasing approximately $7.0 billion in stock during the quarter and declaring a quarterly dividend of $0.10 per share, up from $0.08 in the prior year. The company also provided an optimistic outlook, expecting continued revenue growth driven by upcoming product launches like Windows Vista and the 2007 Microsoft Office system.
Key Highlights
- 1Revenue increased by 11% to $10.81 billion for the quarter ended September 30, 2006, compared to the same period in 2005.
- 2Operating income rose by 11% to $4.47 billion, reflecting revenue growth and a significant decrease in legal settlement costs.
- 3The Entertainment and Devices Division saw a substantial 70% revenue increase, largely driven by the successful launch of the Xbox 360.
- 4Microsoft repurchased approximately $7.0 billion of its common stock during the quarter under new, expanded repurchase programs.
- 5Diluted earnings per share grew to $0.35 from $0.29 in the prior year's quarter.
- 6The company declared a quarterly dividend of $0.10 per share, an increase from $0.08 in the prior year.
- 7Unearned revenue decreased by $805 million from the prior quarter, indicating recognition of revenue from prior period billings.