Microsoft Thursday reported that its rode the back of its two flagship products in booking increases in both its fourth-quarter revenue and its fiscal year 2007 revenue, which topped $51 billion.
But the company reported that the final bill for a warranty program announced in early July to cover faulty Xbox 360 units came in at $1.06 billion and reduced profits for the fourth quarter to $4 billion.
Overall profits for the year were up 12% to $18.5 billion compared to $16.4 billion in fiscal 2006.
The company said fourth-quarter revenue growth was driven by strong acceptance of Vista, Office 2007 and increased sales of SQL Server, Windows Server, Visual Studio and Xbox 360 consoles led to the revenue gains.
Revenue of $13.37 billion for the fourth quarter amounted to a 13% increase over the same period in 2006.
The $51.12 billion in revenue for the fiscal year, which ended June 30, 2007, represented a 15% increase over fiscal year 2006.
“Fiscal ’07 was an excellent year from our perspective,” said Chris Liddell, chief financial officer at Microsoft. “Launches of Vista, the ’07 Office system, Exchange ’07, Zune and Windows Mobile 6 have brought new capabilities into the marketplace so it is exciting to see them off to such strong starts.”
Microsoft also showed strong growth in its annuity licensing programs for corporate customers.
Microsoft said the rate of renewal for Enterprise Agreements, a volume licensing program for companies with more than 250 desktops that includes Software Assurance maintenance, grew at a rate that exceeded the historical renewal average of between 66% and 75%. The company did not provide an exact percentage of renewals.
Annuity licensing, which in part reflects the success of Microsoft’s Software Assurance maintenance program, resulted in a 16% earnings gain to $12.6 billion.
The company said the strength of its client business was one factor in those gains.
“Businesses are recognizing the value that Windows Vista and Software Assurance provides them as evidenced by high renewal and new annuity attach rates driving about a 25% increase in the volume licensing portion of the unearned revenue balance,” said Colleen Healy, general manager of Microsoft’s investor relations.
Microsoft also provided guidance for projected earnings in fiscal year 2008 including revenue in the range of $56.8 billion to $57.8 billion, operating income in the range of $22.2 billion to $22.7 billion, and diluted earnings per share in the range of $1.69 to $1.73.
