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.