What were the main drivers of revenue growth in this quarter?

Revenue growth was primarily driven by strong sales in the Entertainment and Devices Division (Xbox 360 and Kinect), the Microsoft Business Division (2010 Microsoft Office system), and continued growth in the Server and Tools division. The prior year's "Office Deferral" also impacted year-over-year comparisons.

How did the Windows & Windows Live Division perform?

The Windows & Windows Live Division experienced a 4% revenue decrease for the quarter. This was largely due to a decline in the consumer PC market and the impact of the Windows 7 launch in the prior year, which offset growth in business PC segments and multi-year licensing agreements.

What is the company's cash position and how is it being utilized?

Microsoft maintained a robust cash position, with cash, cash equivalents, and short-term investments totaling $50.2 billion as of March 31, 2011. The company continued to return capital to shareholders through share repurchases and dividends. Proceeds from debt issuance were used to fund acquisitions and share repurchases.

Are there any significant legal or tax matters impacting the financial results?

Microsoft settled a portion of a U.S. IRS audit for tax years 2004-2006, which favorably impacted income tax expense for the quarter. However, the company is still subject to audits for these and other years. The company also continues to manage various antitrust and patent litigation matters, with estimated potential liabilities recorded where probable and estimable.

MSFT 10-Q Quarterly Report Q3 FY2011 — Revenue, Net Income, EPS

Summary

Microsoft Corporation (MSFT) reported strong financial results for the third quarter and the first nine months of fiscal year 2011, ending March 31, 2011. Revenue increased by 13% year-over-year for the quarter to $16.4 billion and for the nine-month period to $52.6 billion. This growth was driven by robust sales in the Entertainment and Devices Division, particularly the Xbox 360 and Kinect, the Microsoft Business Division with strong performance from the Office system, and the Server and Tools division. Diluted earnings per share also saw significant increases, rising 36% for the quarter to $0.61 and 26% for the nine-month period to $2.01. The company maintained a strong cash position, with cash, cash equivalents, and short-term investments totaling $50.2 billion. Microsoft continued its commitment to returning capital to shareholders through share repurchases and dividend payments. Despite some headwinds in the Windows division due to a maturing PC market, overall profitability and revenue growth indicate a healthy financial performance for the period.

Financial Highlights

53 data points

Beta

Revenue

$16.43B

0.8% Gross Margin

Net Income

$5.23B

0.3% Net Margin

EPS (Diluted)

$0.61

Total Assets

$99.73B

Cash & Equivalents

$7.02B

Free Cash Flow

$8.01B

Financial Statements

Beta

Revenue	$16.43B
Cost of Revenue	$3.90B
Gross Profit	$12.53B
R&D Expenses	$2.27B
Operating Expenses	$10.72B
Operating Income	$5.71B
Interest Expense	$84.00M
Net Income	$5.23B
EPS (Basic)	$0.62
EPS (Diluted)	$0.61
Shares Outstanding (Basic)	8.42B
Shares Outstanding (Diluted)	8.51B

Key Highlights

1Revenue increased by 13% to $16.4 billion for the three months ended March 31, 2011, and by 13% to $52.6 billion for the nine months ended March 31, 2011.
2Diluted earnings per share increased by 36% to $0.61 for the three months ended March 31, 2011, and by 26% to $2.01 for the nine months ended March 31, 2011.
3The Entertainment and Devices Division showed significant growth with a 60% revenue increase for the quarter, driven by strong Xbox 360 and Kinect sales.
4The Microsoft Business Division reported a 21% revenue increase for the quarter, benefiting from sales of the 2010 Microsoft Office system.
5The Server and Tools division experienced an 11% revenue increase for the quarter, driven by product and Enterprise Services growth.
6Total cash, cash equivalents, and short-term investments grew to $50.2 billion as of March 31, 2011.
7The company settled a portion of a U.S. IRS audit, resulting in a $461 million reduction in income tax expense for the quarter.

MICROSOFT CORP Quarterly Report for Q3 Ended Mar 31, 2011

Summary

Financial Highlights

Key Highlights

Frequently Asked Questions