Microsoft Revenue Up, Profit Down 24%

Microsoft on Thursday reported record fiscal fourth quarter revenue of $11.80 billion, a 16 percent increase over last year. However, the Redmond company's net income was only $2.83 billion for the quarter, a 24 percent decrease largely attributable to mounting legal expenses.

For the fiscal year ending June 30, 2006, Microsoft reported annual revenue of $44.28 billion -- 11 percent higher than the previous year. Annual profit was $12.60 billion, up from $12.12 billion. Legal costs of $1.11 billion were lower than the previous year's $2.06 billion.

The bump in quarterly revenue was helped by Microsoft's video game business, which doubled its revenues to $1.14 billion from the previous year. The company attributed the increase to resolving supply problems with the Xbox 360 console. 1.8 million Xbox 360 units shipped in the fourth quarter.

“Our upcoming launches of Windows Vista, Microsoft Office 2007, Exchange Server 2007, and other key products position us to continue to deliver strong revenue growth in fiscal year 2007," said Microsoft CFO Chris Liddell. "We are also very pleased that both the Microsoft Business Solutions and the Mobile and Embedded Devices businesses achieved profitability for the full fiscal year."

Microsoft also announced on Thursday plans to buy back $20 billion of company shares at a price not greater than $24.75 and not less than $22.50. This would account for 8.1% of outstanding Microsoft common stock. Another $20 billion stock repurchase will be ongoing until June 30, 2011; the company has completed a previous $30 billion repurchase program.