Thursday, July 18th 2013

Microsoft Reports Fourth-Quarter and Full-Year Results

Microsoft Corp. today announced quarterly revenue of $19.90 billion for the quarter ended June 30, 2013. Operating income, net income, and diluted earnings per share for the quarter were $6.07 billion, $4.97 billion, and $0.59 per share. These financial results include a $900 million charge, or a $0.07 per share impact, related to Surface RT inventory adjustments. In addition, these financial results reflect the recognition of $782 million of previously deferred revenue related to the Office Upgrade Offer. All growth comparisons relate to the corresponding period in the last fiscal year.

The following table reconciles these financial results reported in accordance with generally accepted accounting principles (GAAP) to non-GAAP financial results. We have provided this non-GAAP financial information to aid investors in better understanding the company's performance.

"While our fourth quarter results were impacted by the decline in the PC market, we continue to see strong demand for our enterprise and cloud offerings, resulting in a record unearned revenue balance this quarter. We also saw increasing consumer demand for services like Office 365, Outlook.com, Skype, and Xbox LIVE," said Amy Hood, chief financial officer at Microsoft. "While we have work ahead of us, we are making the focused investments needed to deliver on long-term growth opportunities like cloud services."

"We are working hard to deliver compelling new devices and high value experiences from Microsoft and our partners in the coming months, including new Windows 8.1 tablets and PCs," said Steve Ballmer, chief executive officer at Microsoft. "Our new products and the strategic realignment we announced last week position us well for long-term success, as we focus our energy and resources on creating a family of devices and services for individuals and businesses that empower people around the globe at home, at work and on the go, for the activities they value the most."

For Microsoft's fiscal year 2013, the company's revenue, operating income, and diluted earnings per share were $77.85 billion, $26.76 billion, and $2.58 per share. These financial results include a $900 million charge, or a $0.07 per share impact, related to Surface RT inventory adjustments. In addition, these financial results reflect the recognition of $540 million of previously deferred revenue related to the Windows Upgrade Offer, and a $733 million expense related to the European Commission fine.

Microsoft Business Division revenue grew 14% for the fourth quarter and 3% for the full year. Adjusting for the recognition of previously deferred revenue related to the Office Upgrade Offer, Microsoft Business Division non-GAAP revenue increased 2% for the fourth quarter. Office 365 is now on a $1.5 billion annual revenue run rate.

Server & Tools revenue grew 9% for the fourth quarter and 9% for the full year, driven by double-digit percentage revenue growth in SQL Server and System Center.

Windows Division revenue grew 6% for the fourth quarter and 5% for the full year. Excluding the impact of the prior year Windows Upgrade Offer revenue deferral, Windows Division non-GAAP revenue decreased 6% for the fourth quarter and 1% for the full year. In June, Microsoft released the public preview of Windows 8.1 which will be made available to OEMs in August.

Online Services Division revenue grew 9% for the fourth quarter and 12% for the full year, driven by an increase in revenue per search and volume. Bing organic U.S. search market share was 17.9% for the month of June 2013, up 230 basis points from the prior year period.

Entertainment and Devices Division grew 8% for the fourth quarter and 6% for the full year. During the quarter, transactional revenue within Xbox LIVE grew nearly 20%, and we unveiled our next-generation gaming and entertainment console, Xbox One.

"We continue to see strong demand for our enterprise products and services, with more and more customers making long-term commitments to the Microsoft platform," said Kevin Turner, chief operating officer at Microsoft. "The growing adoption of our cloud services, including Office 365, Windows Azure and Dynamics CRM, continues to demonstrate our leadership position in the cloud."

Operating Expense Outlook
Microsoft is revising operating expense guidance downward to $31.3 billion to $31.9 billion for the full fiscal year ending June 30, 2014.
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13 Comments on Microsoft Reports Fourth-Quarter and Full-Year Results

#1
Jorge
Microsucks, killing themselves softly...
Posted on Reply
#2
johnsushant
by: Jorge
Microsucks, killing themselves softly...
/s

Because $5 Billion net profit just ain't cutting it anymore?
Posted on Reply
#3
Frick
Fishfaced Nincompoop
by: Jorge
Microsucks, killing themselves softly...
Microsoft Business Division revenue grew 14% for the fourth quarter and 3% for the full year. Adjusting for the recognition of previously deferred revenue related to the Office Upgrade Offer, Microsoft Business Division non-GAAP revenue increased 2% for the fourth quarter. Office 365 is now on a $1.5 billion annual revenue run rate.

Server & Tools revenue grew 9% for the fourth quarter and 9% for the full year, driven by double-digit percentage revenue growth in SQL Server and System Center.

Windows Division revenue grew 6% for the fourth quarter and 5% for the full year. Excluding the impact of the prior year Windows Upgrade Offer revenue deferral, Windows Division non-GAAP revenue decreased 6% for the fourth quarter and 1% for the full year. In June, Microsoft released the public preview of Windows 8.1 which will be made available to OEMs in August.

Online Services Division revenue grew 9% for the fourth quarter and 12% for the full year, driven by an increase in revenue per search and volume. Bing organic U.S. search market share was 17.9% for the month of June 2013, up 230 basis points from the prior year period.

Entertainment and Devices Division grew 8% for the fourth quarter and 6% for the full year. During the quarter, transactional revenue within Xbox LIVE grew nearly 20%, and we unveiled our next-generation gaming and entertainment console, Xbox One.
Yeaahh the are doing real bad.

Yes the RT thing wasn't exactly great, but they still had solid figures even after that. Now sell them at $100 a pop!
Posted on Reply
#4
mandis
For an industry leader they should have been in a far better shape. Microsoft has lost focus of what they do and Google is proof. All Google users are ex microsoft users and all Google profits should have been Microsoft profits...

hint: Still looking for a way to make my desktop PC 100% windows 8/8.1 compatible!!! :banghead:
Posted on Reply
#5
johnsushant
by: mandis
For an industry leader they should have been in a far better shape. Microsoft has lost focus of what they do and Google is proof. All Google users are ex microsoft users and all Google profits should have been Microsoft profits...

hint: Still looking for a way to make my desktop PC 100% windows 8/8.1 compatible!!! :banghead:
This doesn't even make sense.

Google doesn't make money out of a Desktop OS, Office Suite, Server Software or a Gaming console which is where MS makes almost ALL of its money.

Also people blame the decline of PC sales to the fact that their age old PC can run Windows 8 smoothly.
Posted on Reply
#6
Dos101
by: Frick


Yes the RT thing wasn't exactly great, but they still had solid figures even after that. Now sell them at $100 a pop!
If you went to TechEd, BUILD, or WPC, the RT's could be had for $100 and the Pro's for $400. I wish I could afford to go to those conferences :cry:

by: mandis

hint: Still looking for a way to make my desktop PC 100% windows 8/8.1 compatible!!! :banghead:
It's called upgrading. Want to be able to use the latest features of an OS? You gotta upgrade to parts that support it.
Posted on Reply
#7
Ahhzz
by: mandis


hint: Still looking for a way to make my desktop PC 100% windows 8/8.1 compatible!!! :banghead:
Why bother? Stick with 7 as long as it works. "If it ain't broke, don't fix it". Obviously, moving to 8 is breaking things. Sticking with 7, ain't.
Quod Erat Demonstrandum.
Posted on Reply
#9
MxPhenom 216
Corsair Fanboy
by: mandis
For an industry leader they should have been in a far better shape. Microsoft has lost focus of what they do and Google is proof. All Google users are ex microsoft users and all Google profits should have been Microsoft profits...

hint: Still looking for a way to make my desktop PC 100% windows 8/8.1 compatible!!! :banghead:
you have no idea what you are talking about. Unless you meant to say Apple.
Posted on Reply
#10
Dent1
by: johnsushant

Also people blame the decline of PC sales to the fact that their age old PC can run Windows 8 smoothly.
Judging from the article Microsoft are doing very well.

The decline of PC sales is due to portable and handheld sales increasing. Tablets, laptops, mobile phones. Also, desktop processors have become so fast that the upgrade cycle for most users have become less frequent.
Posted on Reply
#11
mandis
by: Ahhzz
Why bother? Stick with 7 as long as it works. "If it ain't broke, don't fix it". Obviously, moving to 8 is breaking things. Sticking with 7, ain't.
by: johnsushant
People blame the decline of PC sales to the fact that their age old PC can run Windows 8 smoothly.
by: Dos101
It's called upgrading. Want to be able to use the latest features of an OS? You gotta upgrade to parts that support it.
by: MxPhenom 216
you have no idea what you are talking about. Unless you meant to say Apple.
It's not really a hardware compatibility problem I'm having to deal with. What I was referring to was the new TOUCH capability of windows 8. The "Modern" UI has been designed with touchscreens in mind and while it will work fine with just the mouse it still feels like something is missing from the intended user experience. In my opinion Microsoft has released a half baked product with W8. While the software side is more or less resolved and coherent, there is no real way to use the new features with a common desktop pc (expect some AIOs) nor are there any clear user guidelines.

Assuming I was able to purchase a 20"-30" capacitive touchscreen at a reasonable price in order to replace one of the 3 displays currently in my setup. Where would this new touchscreen go? At the edge of the desk next to the other 2? Perhaps at an angle closer to the keyboard? on an articulating vesa mount? Just how the hell would the ergonomics work?? There are other more serious issues too but this topic in particular has caused a lot of discussion at work.

Surface RT is another prime example. While this tablet is fully touch capable with great ergonomics and hardware it somehow still sports a desktop UI with an addon keyboard and touchpad!:confused: What for?? Where is Microsoft's commitment to their new Touch UI? Where is their vision?? Aren't they the same company who gave us tablet PCs and demoed the amazing Surface tabletop 8 years ago??? Shouldn't they have had all touch based user interaction scenarios figured out by now???

The XBOX ONE release also caused alot of negative reactions due to the product's shift from a games console to a media hub but I'm not gonna go into this as I haven't used one yet.

Microsoft appears to have lost focus of their core consumer product lines. Google is not a direct competitor in all these segments yet has somehow managed to drain revenue from Microsoft's product lines to their own. There are more Android Smartphones and Tablets being activated every single day than there are Windows desktops, laptops, Phones, Tablets and Xboxs. Google has managed to convince many consumers that Smartphones and Tablets are proper PC replacements and that Windows is not hype anymore. Obviously the folk at Redmont have made things very easy for them... :banghead:

What do you guys think?
Posted on Reply
#12
Dos101
by: mandis
It's not really a hardware compatibility problem I'm having to deal with. What I was referring to was the new TOUCH capability of windows 8. The "Modern" UI has been designed with touchscreens in mind and while it will work fine with just the mouse it still feels like something is missing from the intended user experience. In my opinion Microsoft has released a half baked product with W8. While the software side is more or less resolved and coherent, there is no real way to use the new features with a common desktop pc (expect some AIOs) nor are there any clear user guidelines.

Assuming I was able to purchase a 20"-30" capacitive touchscreen at a reasonable price in order to replace one of the 3 displays currently in my setup. Where would this new touchscreen go? At the edge of the desk next to the other 2? Perhaps at an angle closer to the keyboard? on an articulating vesa mount? Just how the hell would the ergonomics work?? There are other more serious issues too but this topic in particular has caused a lot of discussion at work.

Surface RT is another prime example. While this tablet is fully touch capable with great ergonomics and hardware it somehow still sports a desktop UI with an addon keyboard and touchpad!:confused: What for?? Where is Microsoft's commitment to their new Touch UI? Where is their vision?? Aren't they the same company who gave us tablet PCs and demoed the amazing Surface tabletop 8 years ago??? Shouldn't they have had all touch based user interaction scenarios figured out by now???

The XBOX ONE release also caused alot of negative reactions due to the product's shift from a games console to a media hub but I'm not gonna go into this as I haven't used one yet.

Microsoft appears to have lost focus of their core consumer product lines. Google is not a direct competitor in all these segments yet has somehow managed to drain revenue from Microsoft's product lines to their own. There are more Android Smartphones and Tablets being activated every single day than there are Windows desktops, laptops, Phones, Tablets and Xboxs. Google has managed to convince many consumers that Smartphones and Tablets are proper PC replacements and that Windows is not hype anymore. Obviously the folk at Redmont have made things very easy for them... :banghead:

What do you guys think?
The problem with releasing an OS that has "Windows" in the title is people expect the desktop to be there, and really on Surface RT for example, there is no reason the desktop DOESN'T need to be there. You don't even have to use it if you don't want to, you don't even need the keyboard either if you're just in the Metro environment. But the desktop is handy for when you want to do actual work (like MS Office, being able to attach printers/scanners, flash drives, external hard drives, cameras, pretty much any USB device). Then if you want to just use apps you go back to the Metro environment, which is fully touch supported and also works easily with a mouse+kb. To release W8 without the desktop would be catastrophic. You also have to realize that W8 is a transitional OS, where we they trying to strike a balance between all the different inputs that are available and that people would use. W8 itself didn't do a great job of it but with 8.1 that will suit 99% of the people out there.

I don't know of any negative reactions about Xbox One's media focus as it's not really a shift, the Xbox 360 could do a lot of that too and still be a console so I'm not sure what's negative about it. Just means that instead of needing 2 or 3 other devices I can just use the Xbox One. I think you might be referring to the DRM issue that caused quite a stir.


I'm honestly getting sick of people saying that Microsoft has lost focus, lost their way etc. They are adapting to a changing industry and are shifting from a software company to a services and devices company. They were stubborn for a long time about the direction that consumer products were taking and are now having to play catchup while still satisfying the legacy crowd. You all should be happy that they didn't do a complete overhaul of Windows and completely leave out backwards compatibility (see Apple going to Mac OS X from 9). If you don't like the direction that Microsoft is taking Windows then I very much doubt you like the way the entire industry is going, meaning you're quarrel isn't with MS, it's with the average consumer who dictates the trends.
Posted on Reply
#13
Frick
Fishfaced Nincompoop
by: Ahhzz
Why bother? Stick with 7 as long as it works. "If it ain't broke, don't fix it". Obviously, moving to 8 is breaking things. Sticking with 7, ain't.
Quod Erat Demonstrandum.
DOS and earlier iterations of Windows wasn't exactly broken either (not all of them anyway).

Anyway no one is forcing anyone to upgrade to Windows 8, but that IS the way it is going no matter how we feel. That is a fact. We can stick to Windows 7 until 2020, move to *nix (including OSX), wait until arm gets quick enough and move to Android/iOS/whatever, use 3rd party programs that bring the start meny back or just adapt how we do things on a computer. Which we will have to do sooner or later anyway, be it in a year or ten years. It has always been like this, the difference is that computers are now everywhere and it's easier to voice your opinion to the masses.

EDIT: On topic, I really do believe they should sell those Surface RT's at like $150 just to get them out to people. As I understand it the app selection is the biggest problem. More users would make it more interesting.
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