Microsoft reports blow-out Q4, record year on Xbox sales

By on Jul 21, 2011 at 5:01 PM
General July 21, 2011

Microsoft released its fiscal fourth-quarter earnings on Thursday and noted that its revenue of $17.73 billion was greater than any other fourth quarter in the company’s history. The Redmond-based firm also reported $69.94 billion in revenue for the fiscal year — also a record — up 12% from 2010. The company’s Entertainment & Devices division was particularly successful, reporting 30% growth in revenue for the fiscal fourth quarter and 45% for the entire year thanks to Xbox Live, the Xbox 360 game console, and the Kinect controller. “Throughout fiscal 2011, we delivered to market a strong lineup of products and services which translated into double-digit revenue growth, and operating margin expansion,” said Peter Klein, chief financial officer at Microsoft. “Our platform and cloud investments position us for long-term growth.” Read on for Microsoft’s full press release.

Microsoft Reports Record Fourth-Quarter and Full-Year Results

Microsoft Office, server products, and Xbox 360 drive $17.37 billion of fourth-quarter revenue

REDMOND, Wash. — Jul. 21, 2011 — Microsoft Corp. today announced record fourth-quarter revenue of $17.37 billion for the quarter ended June 30, 2011, an 8% increase from the same period of the prior year. Operating income, net income, and diluted earnings per share for the quarter were $6.17 billion, $5.87 billion, and $0.69 per share, which represented increases of 4%, 30%, and 35%, respectively, when compared with the prior year period.

For the fiscal year ended June 30, 2011, Microsoft reported record revenue of $69.94 billion, a 12% increase from the prior year. Operating income, net income, and diluted earnings per share for the year were $27.16 billion, $23.15 billion, and $2.69, which represented increases of 13%, 23%, and 28%, respectively, when compared with the prior year.

“Throughout fiscal 2011, we delivered to market a strong lineup of products and services which translated into double-digit revenue growth, and operating margin expansion,” said Peter Klein, chief financial officer at Microsoft. “Our platform and cloud investments position us for long-term growth.”

Microsoft Business Division revenue for the fourth quarter grew 7% and 16% for the full year. Office 2010 continues to be the fastest-selling version of Microsoft Office in history with over 100 million licenses sold. In June, Microsoft released Office 365 with familiar Microsoft Office collaboration and productivity tools delivered through the cloud.

Server & Tools revenue grew 12% for the fourth quarter, the fifth consecutive quarter of double-digit growth, and grew 11% for the full year. Windows Server, System Center, and SQL Server continued to drive revenue growth in the segment.

Windows and Windows Live Division revenue declined 1% for the fourth quarter and revenue for the full year decreased 2%. Excluding the impact of the prior year Windows 7 launch and revenue deferral, we estimate full-year revenue growth was in line with PC market growth of 2% to 4%. Windows 7 has sold over 400 million licenses and business deployments continue to accelerate. During the quarter, Microsoft unveiled a preview of the next version of Windows, codenamed Windows 8, featuring a new user interface and application experience.

Online Services Division revenue grew 17% for the fourth quarter and 15% for the full year, primarily driven by increases in search revenue. Bing’s U.S. search share increased 340 basis points year-over-year to 14.4% this quarter. Microsoft also released new features that incorporate the Facebook social graph to help users make better decisions based on their social connections.

Entertainment & Devices Division revenue grew 30% for the fourth quarter and 45% for the full year, due to the ongoing momentum of the console, Kinect, and Xbox Live. Xbox 360 has been the top-selling game console in the U.S. over the past twelve months. At E3 in June, Microsoft highlighted its upcoming game lineup, Xbox Live content partnerships, and enhanced content discovery using Bing and Kinect.

“A strong year of double-digit increases in revenue and earnings is a real credit to all of our Microsoft employees and partners around the world. We continue to see strong business demand across all of our products, from small businesses all the way up to the largest global enterprises,” said Kevin Turner, chief operating officer at Microsoft. “Our move to cloud services continues with the release and momentum of Office 365 and growth in Windows Azure. We’re providing our customers seamless and powerful ways to move to the cloud, and we are well positioned for the coming year.”

Business Outlook

Microsoft reaffirms fiscal 2012 operating expense guidance of 3% to 5% growth from 2011, or $28.0 billion to $28.6 billion.

Webcast Details

Peter Klein, chief financial officer, Frank Brod, chief accounting officer, and Bill Koefoed, general manager of Investor Relations, will host a conference call and webcast at 2:30 p.m. PDT (5:30 p.m. EDT) today to discuss details of the company’s performance for the quarter and certain forward-looking information. The session may be accessed at http://www.microsoft.com/investor. The webcast will be available for replay through the close of business on Jul. 21, 2012.

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  • Anonymous

    And in after hours trading the stock goes “Meh”.

    • Anonymous

      note: zero mention of marketshare losses, so yeah. pretty much.

  • Anonymous

    MS breaking records due to XBOX/Kinetic and Apple breaking records due to iPhones/iPads. Strange times we live in.

    • Anonymous

      I doubt that Xbox is the primary profit source like iPhones Ipads are for apple.   Xbox growth is impressive, but the battleships of Windows, Server products, and Business products are the big guns.

      Interesting no mention of the word ‘Phone’ or ‘Mobile’ in the release.

      • Anonymous

        Yeah, I know that Windows/Office is their bread and butter. But amazing seeing two computer companies having so much growth in other areas.

        What’s interesting about Phone or Mobile. They just relaunched in November.

      • Anonymous

        My questions is this: why isn’t there Office for the iPad? You know how many copies they’d sell?

        Pages is okay, but not great.

      • Anonymous

        as noted microsoft is not a ‘computer’ company.  it’s a SW company.   But it seems most people are buying tablets and smartphones, none of which run windows SW.  See the disconnect. 

        Their revenue report seems a lot like RIMM’s a quarter ago… record setting, but with no real winners in the (mobile) pipeline.  RIMM is a one trick pony… MS has the Clydesdales of Windows 7, Server SW, and Office.  But where is the growth in PCs, if everyone is buying tablets?

  • Anonymous

    Lmao the Stock is still worth shit ahahahha

    • mangenius

      I love stupid people who dont understand that if Microsoft hadn’t split its stock 12,000 times then the value would far exceed Apple

      • Anonymous

        Stupid people (mangenius (ironic)) don’t seem to realize a company’s worth is not the price of a single share of stock, but the price of all shares combined.

        Apple is worth more than Microsoft.  Sorry.

      • Anonymous

        LOL, you didn’t understand his post.

      • Anonymous

        LOL, of course I did.  MS stock has been stagnant forever.  Whether its per-share price right now is $25 or $1,000 (because MS hadn’t split it *12,000* times), the stock is still flatlined and Apple has still surpassed MS in company value.

        So yes, the stock is still worth poop as The_Facts88 so crudely pointed out.

      • Mik389383

        Your a huge Duche! your really didnt understand!

      • mangenius

        Yup douche who didnt understand.  he said the stock isnt worth anything, I said its because of the splits that occurred.  Im not going to do the math for you – truly I cant be bothered enough – but I can tell you it would be worth more than what apple currently trades for.

        As a stock owner you want to see the shares move, Ill give you that, but tell me how much $$ in dividends is payed out to Apple stock holders?  Fucken retard

      • Anonymous

        @ “mangenius”: Your understanding of corporate stock valuation is about as good as your spelling.  Which is to say, pitiful.

        I’ll take my stock gains in my AAPL over those little dividends MSFT pays any day of the week.  Of course, based on the level of intelligence in your commentary, you probably don’t own a single share of either company.  Or a car, for that matter.  Go back to school.  Get a job.  Buy some MSFT.  Watch it not increase in value.  Enjoy.

      • mangenius

        yes spelling on a message board is very indicative of someone’s worth (but I’d love for you to point out my spelling mistakes).  I made my money on MSFT.. I made a lot, and now I sit back with my stocks and collect dividends. 

        I do still think youre an idiot.  You can spell, and you know about stock valuation, but you cant understand that the original post was referring to the fact that MSFT’s stock is worth shit.  My point was that the current value of the stock is where it is at because of the splits.. I read an article a while ago that calculated had the stock not split, its current value would be upwards of $8k a share.  Sorry you were too stupid to buy them and make money at that time.. so my comment about you stands you still are a douche 

      • Michale11111

        Are you a moron with no knowledge of the stock market? Splitting a stock has no effect on a company’s market capitalization. It does nothing to the sum total of it’s stock value. It’s the same pie split into more pieces to make it easier to buy. One share worth $100 split 10 for 1 becomes 10 shares worth $10.

        Talk about stooooopid! The only stupid person on this subject is you.

      • Mike33352

        whoa your another duche too! You really dont understand the post!

      • mangenius

        LOL you dont get it do you LOL

      • Anonymous

        lol huh? And your calling others stupid. Do some research dum dum

    • sirpaul

      Learn how the stock exchange works retard.

    • Bullyboyb

      Investors are not only concerned with the stock price alone. They are concerned with other aspects which can be seen by calculating investment ratios and total share holder return. Total shareholder return is calculated as the difference in share price over the period plus dividends divided by the share price at the end of the period. What Microsoft might not make up in share price growth it might do in terms of dividends paid. Apple might not pay a huge dividend but makes this up through share price growth.

      the point being both companies are not doing badly but apple is a far more attractive investment option as things stand. However looking at this on its own would be very foolish. Alot of factors are considered including a lot of forecasting and speculation.

  • Anonymous

    it’s impressive… hmmm, not in a relative sense.

    Apple is growing revenue 7times faster than Microsoft  (58% vs 8%)
    Apple made 25% more profit this quarter (+1.44Billion).

    If Apple made just 1.1B more last quarter, it would have made more money than Microsoft and Google _combined_.

    Just saying… some numbers are impressive, and as noted, some numbers are ‘meh.’

    • Anonymous

      Start a company that make $10.00 of revenue, then you can talk about how a company making billions is “meh”.

      • Anonymous

        I did. actually more like 1M in revenue over 3 years.  Sold it and generated add’l profit.  what’s your point?

      • TompsonSiez

        sure you did. Stop at this point

      • Bigjones23

        agreed. theothergeoff sounds like a huge duche bag who really doesnt get the post. Ge should just stop at this point.

    • Bullyboyb

      Revenue should be looked at in terms of how much was invested to make that much and also the costs. For example, what’s the point of investing 100 billion to make 60 billion when other companies are investing 40 billion to make 55 billion.

      Give a more thorough analysis instead of throwing meaning revenue figures about. Having larger revenues does not mean you are a more efficient company or offer a better return.

    • Bullyboyb

      I would rather invest in a smaller company that offers a better return with less revenues than a huge company with large revenues but poor return on my investment.

      I will say it again revenue figures taken on their own mean shit.

      • Anonymous

        ‘small’ is a vague term

        Apple is small compared to MS in employees…  46K vs 89K respectively.
        I like revenue per employee as a measure of ‘size’

        Google with 26K and 1/4 the revenues of Apple… again, in a relative sense… meh.

  • Jsantana0793

    Yea, it does go Meh because their stock is still measured by Windows OS, Windows Office, Windows Enterprise, Windows Phone, and lack of real innovation. Windows 8 looks promising, but what gets me about Microsoft is that they take so long to release updates. Mango should have been released shortly after announcement. Even if it need to be released in Parts, That’s what I like about Apple. They announcement big updates and products and then shortly after, the update or product are available. Not a year later. No long drawn out wait.

    Other than all the BS.. Good for Microsoft.. Keep the Xbox 360 fresh..

  • Anonymous

    Remember when no one thought Apple would ever catch up to Microsoft, let alone surpass them?

    Ah, nostalgia!

  • michael clanton

    MICROSOFT IS STILL THE BIGGEST SOFTWARE COMPANY IN THE WORLD, THEY DONT HAVE TO BEAT APPLE TO BE SUCCESSFUL, FOR THE ONES WHO INVEST, MICROSOFT DOES VERY WELL AND THEY PAY DIVIDENDS! THE GAME ISN’T IF YOU BEAT APPLE THEN YOUR OK.

    • Anonymous

      Microsoft would be best served if they stopped trying to beat Apple. And by “Microsoft” I mean Steve Ballmer. He can’t let Apple go.

      Microsoft is a software company. Apple is a hardware company. Why isn’t there Office for the iPad? Something tells me Ballmer said no.

      As far a dividends, that’s debatable, as Apple’s stock has soared so much that there’s probably quite a few savvy investors who are now very rich.

      • Bullyboyb

        Is the stock price supported by retained earning and other assets. If you want to go in and out its fine. If you want to go in for the long long haul be very weary, I would choose Microsoft as a better long term investment option apple as a short to medium term.

      • Anonymous

        Um, Apple’s assets are all incredibly liquid, and their retained earnings and earning per share are very, very healthy.

      • Dino478

        You should silence yourself Pendergast. You sound real stupid. Seriously. Your post makes no sense.

      • Anonymous

        The fact that MS should release Office on iOS devices makes no sense?

        Instant revenue.

        The fact that Ballmer has to insult Apple every time he speaks tells me that he may be a part of the reason they haven’t done so yet,

    • SampsonJohons

      agreed. remember when everyone thought xbox would not be a contender in the video game market a few years back? Who’s the market leader now!

  • serpentor

    Before everyone comments comparing how many billions Apple vs MS. vs Google makes, realize that

    1. Apple makes their money on  hardware. Their avg product costs what? $1,000?

    2. MS is a software company. They make their money on selling licenses.

    3. Google makes their money selling ads.

    • Anonymous

      1.  if you sell 15billion songs for a .99,  and OS licenses for $30, then I doubt your average selling price per item is $1000.

                   Apple makes their money selling ‘systems’  (HW and SW and integration)

      2.  agreed.   
              
      3. Google makes their money selling their consumers’ personal surfing habits.

      • serpentor

        Well, I’m talking each’s main sources of revenue. I don’t think even Apple considers their music biz as remotely significant. And ultimately, they do their own software to drive hardware sales.

        Look at highlights of Apple’s earnings call and sales of hardware is what everyone’s interested in.

      • Anonymous

        and I’m talking Apple selling a full service solution.  Which means with one credit card on ITMS and Apple’s retail store, you can buy a $5 movie or a Mac Pro.   and it shows up and just works.  together.  that $49 ipod shuffle makes your apple experience ‘better.’
        The .99 transaction is the great loss leader to get a credit card into the apple selling machineApple = a synergistic system of media, function, platform and delivery.Your main driver into the Microsoft selling machine… Buying a $600 Dell at Best Buy?      

        Microsoft = a symbiotic parasite on the side of a hardware purchase.

  • Bob

    U mad BGR?

  • Michale11111

    Microsoft has some great, incredible software and XBox too, bu it doesn’t change the fat Ballmer is a fat salesman and a POS who should be fired. Microsoft’s failures in the mobile market are proof he has nothing to do with their successes.

  • http://twitter.com/HireMeAccenture HireMeAccenture.com

    I hope the next gen system from Microsoft doesn’t have as many issues as the 360 did.  

    Help Me Get A Job!!!
    www[dot]hiremeaccenture[dot]com

    Leave A Comment!!

  • Anonymous

    Yeah, I got to support Microsoft by buying a new 360 after my OG one had the ol’ Red Ring of Death

  • Anonymous

    Record sales! Because all of the previous xboxes have red ringed past warranty.

  • Anonymous

    That’s good, wait till mango is released..with nokia and sexy hardware..apple is making billions from the iPhone and so will microsoft.

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