Microsoft’s 41% operating margin impresses

Microsoft has reported an 11% increase in both sales and profits for the first quarter, ended 30 September.

Microsoft has reported an 11% increase in both sales and profits for the first quarter, ended 30 September.

Turnover was $10.81bn (£5.84bn) and operating profit was $4.47bn (£2.41bn), giving the company an impressive operating margin of 41.3%.

“The solid revenue results for the quarter were at the top end of our expectations and represent a very good start to the fiscal year,” said Microsoft's chief financial officer Chris Liddell.

The results outstripped market forecasts and the company has plenty to come, with the arrival of Windows Vista for businesses next month and the full launch in early January. The company will soon launch the next version of its Office collaboration suite, Office 2007.

Server and tools revenue increased 17% over the same quarter in the previous year, reflecting a healthy performance for offerings such as SQL Server 2005, Windows Server, Visual Studio 2005 and BizTalk Server, said Microsoft.

SQL Server experienced revenue growth of more than 30%, as customers increasingly deployed SQL Server for their mission-critical, transaction-oriented databases.

The entertainment and devices division saw revenue growth of 70% over the previous year, driven by demand for the Xbox 360 games console and games software. The firm said 6m Xbox 360s had so far been sold worldwide since its launch.

Kevin Turner, chief operating officer at Microsoft, said, “As we look to the upcoming releases of Windows Vista, the 2007 Microsoft Office system and Exchange Server 2007, we are excited about these products and believe they will deliver unprecedented levels of business value to our customers.”


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