Microsoft's revenue for the fiscal year to end June 2007 reached $51.12 billion, a 15.6 percent increase over last year's numbers. The software maker had a growth of 12 percent in net income to $14 billion, driven mostly by good performance of their ‘Server and Tools’ and ‘Business’ divisions, with solid sales of its SQL Server, Windows Server, Visual Studio products, and Office 2007.
However, some analysts were underwhelmed by the financial performance of the company's most important product: the new Windows Vista operating system. Chief financial officer Chris Liddell said Windows Vista revenue recognition came in $20m to $30m lower than expected. Also, the Entertainment and Devices division, which took a hit from the $1.06 billion charge-off for Xbox warranties, had revenue of $1.16 billion, down 10 percent, and an operating loss of $1.2 billion.
The Online Services business, where Microsoft competes with Google, saw advertising revenue in the quarter increase 33 percent to $544 million. Nevertheless, the business still reported an operating loss of $239 million in the quarter. Chris Liddell said he expects next year to continue to be a year of investment, which means more losses before it can turn into a profitable business.
Looking to the 2008 fiscal year, the company now expects revenue in the range of $56.8 billion to $57.8 billion, and operating income of $22.2 billion to $22.7 billion, through new product offerings next year.