Summary
Microsoft Corporation's (MSFT) 10-Q filing for the period ending December 30, 2010, reveals a solid financial performance, with a notable increase in revenue and diluted earnings per share for the six-month period compared to the prior year. While the company experienced a slight decrease in operating income for the three-month period, this was primarily attributed to increased operating expenses, particularly in cost of revenue related to higher volumes of Xbox 360 consoles and accessories. The company continues to demonstrate strong revenue generation across its key segments, with significant growth in Microsoft Business Division and Entertainment & Devices Division, driven by sales of the 2010 Office system and the Xbox 360 platform, respectively. Microsoft maintains a robust liquidity position with substantial cash, cash equivalents, and short-term investments, exceeding $41 billion. The company actively returned capital to shareholders through significant share repurchases and dividends. Despite ongoing legal and regulatory challenges, Microsoft's financial health appears strong, supported by diversified revenue streams and strategic investments in growth areas like cloud services and the Xbox platform. Investors should monitor the impact of ongoing segment performance, particularly in the competitive online services and Windows divisions, as well as the company's strategic positioning in evolving technological landscapes.
Financial Highlights
53 data points| Revenue | $19.95B |
| Cost of Revenue | $4.83B |
| Gross Profit | $15.12B |
| R&D Expenses | $2.19B |
| Operating Expenses | $11.79B |
| Operating Income | $8.16B |
| Interest Expense | $72.00M |
| Net Income | $6.63B |
| EPS (Basic) | $0.78 |
| EPS (Diluted) | $0.77 |
| Shares Outstanding (Basic) | 8.50B |
| Shares Outstanding (Diluted) | 8.57B |
Key Highlights
- 1Revenue increased by 5% for the three months ended December 31, 2010, to $19.95 billion, and by 13% for the six months ended December 31, 2010, to $36.15 billion, compared to the prior year periods.
- 2Diluted earnings per share (EPS) saw a 4% increase to $0.77 for the three months and a 22% increase to $1.39 for the six months ended December 31, 2010, compared to the prior year.
- 3Operating income decreased slightly by 4% to $8.17 billion for the three months but increased significantly by 18% to $15.28 billion for the six months ended December 31, 2010.
- 4The Entertainment and Devices Division showed strong growth, with revenue up 55% for the three months and 44% for the six months, driven by Xbox 360 console and accessory sales, including Kinect.
- 5Microsoft Business Division also demonstrated robust performance, with revenue up 24% for the three months and 19% for the six months, largely due to sales of the 2010 Microsoft Office system.
- 6The company maintained a strong liquidity position, with cash, cash equivalents, and short-term investments totaling $41.25 billion as of December 31, 2010.
- 7Microsoft continued its capital return program, repurchasing approximately 188 million shares for $5.0 billion in the three-month period and 351 million shares for $9.0 billion in the six-month period.