MICROSOFT CORP Quarterly Report for Q1 Ended Sep 30, 2009

Summary

Microsoft Corporation's (MSFT) 10-Q filing for the quarter ended September 30, 2009, indicates a revenue decline of 14% to $12.92 billion compared to the same period in the prior year, totaling $15.06 billion. This decrease was primarily attributed to the deferral of approximately $1.5 billion in revenue related to the Windows 7 Upgrade Option and pre-release sales of Windows 7. The company also saw a 25% decrease in operating income, falling to $4.48 billion from $5.99 billion year-over-year. Diluted earnings per share also declined by 17% to $0.40 from $0.48. Despite the revenue challenges, Microsoft demonstrated a strong balance sheet with cash, cash equivalents, and short-term investments increasing to $36.7 billion. The company continued its share repurchase program, buying back $1.4 billion in the quarter, and maintained its quarterly dividend of $0.13 per share. Operating expenses were managed effectively, with decreases in research and development, sales and marketing, and general and administrative expenses, partly due to headcount reductions under a resource management program.

Key Highlights

• 1Revenue for the quarter decreased by 14% to $12.92 billion compared to $15.06 billion in the prior year's quarter, impacted by a significant revenue deferral for Windows 7.
• 2Operating income declined by 25% to $4.48 billion from $5.99 billion year-over-year.
• 3Diluted earnings per share decreased by 17% to $0.40 from $0.48 in the same period last year.
• 4Cash, cash equivalents, and short-term investments increased to $36.7 billion, indicating strong liquidity.
• 5Operating expenses were reduced across R&D, sales & marketing, and G&A, partially due to headcount reductions.
• 6Microsoft continued its share repurchase program, buying back approximately $1.4 billion of stock during the quarter.
• 7The company declared a quarterly dividend of $0.13 per share.

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