Office 97 helps Microsoft posts record earnings for quarter

Microsoft today announced net income of US$1.04 billion for the quarter ending March 31, an 80% increase over the same quarter last year. Revenues totaled $3.21 billion, a 45% increase over last year. Microsoft was quick to downplay the dramatic gains:

"Worldwide acceptance of Microsoft Office 97 ignited these outstanding results," noted Mike Brown, Microsoft's chief financial officer. "As corporate and retail customers upgraded to this new product with enthusiasm, we also realized solid gains in the OEM channel because of the continued popularity of 32-bit Windows operating systems. And we reaped the benefits of an improved cost model. However, incredible results like these are seldom duplicated, and we are mindful of the very tough comparisons we will have in fiscal 1998."

According to Microsoft, the company has sold 8 million copies of Office 97 since the product went on sale three months ago. There are now over 60 million Microsoft Office users. The company also announced that 15 million people are using Internet Explorer 3.0, the company's Web browser and that 750,000 developers and users downloaded Internet Explorer 4.0 since it was first made available ten days ago. The popularity of Internet Explorer across the globe is underscored by the fact that the product, for the first time, is now accounting for over 50% of hits on popular international Web sites.

In a conference call with financial analysts and the press, Microsoft CFO Mike Brown and VP and Treasurer Greg Maffei announced a few other interesting factoids:

  • There are now more Microsoft MCSEs than Novel CNEs.
  • Microsoft has $9.1 billion in cash.
  • Microsoft repurchased about 20.4 million shares of common stock in the quarter at a cost of about $2 million.
  • "All in all" a tremendous quarter. Next quarter and next year should be more sobering. Microsoft has a tradition of mentioning this in huge quarters such as this one, however.
  • Windows 95 upgrades penetrated 30% of all Windows desktops in the first 20 months. Sales have not slowed but they are expected to do so by the time Memphis is released in "mid-1998."
  • Office 97 is "incredible" and the next upgrade is due in 1999.
  • Windows NT and BackOffice continued to grow. Further growth is dependent on the server business, which is currently strong. Brown noted that there is "a lot of FUD out there...about NT, the cost of ownership, and \[the\] scalability \[of NT\]. Microsoft is combating this misinformation now.
  • R & D costs should grow each quarter throughout the year.
  • "It would be un-Microsoft-like for the company not to give \[its enterprise competitors\] their share of Steve Ballmer's affections," a cute way of saying that the company will up their competition in the enterprise arena.
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