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In addition to announcing its September quarter results (read conference call transcript), the company filed its 10-Q for the quarter. I’m wading through it; here are a couple of interesting tidbits:

  • I’d assume due to expected seasonality, revenue in all five Microsoft divisions were down sequentially from the June quarter.
  • The client division, which includes Windows, had a 4% year-over-year gain in revenue, a 3% gain in operating income. Headcount grew 13%.
  • Servers and tools grew 17% topline, 36% in operating income.
  • Online services declined 4% topline, due to the 30% decline in access revenue; the bottom line dropped into the red, versus a modest operating profit one year earlier. The company blamed the decline in revenue, increased headcout-related costs related to investments in Windows Live, adCenter and other properties and increased costs of revenue for the build out of data center infrastructure. Headcount in this division increased 40%.
  • Microsoft Business Division, including Office, grew revenues 4%; operating income was about flat. Headcount in that division grew 11%.
  • Entertainment and Devices divison: revenue grew 70%; operating loss dropped 45%. Headcount increased 18%.
  • Overall headcount has increased 17% over the last 12 months.

Buried in the filing were some interesting forecasts. For instance:

  • We estimate worldwide PC shipments will continue to grow 8% to 10% and overall server hardware shipments will continue to grow 10%-12% in fiscal year 2007.
  • We expect our operating income growth rate in fiscal 2007 will lag behind our revenue growth rate. We expect our level of spending to increase in four key areas in 2007: increased product costs associated with Xbox consoles; marketing and field sales spending including product launch costs; quickening the pace of development in growth areas such as business intelligence, security, management and unified communications (including through acquisitions); and increased costs to execute on our online strategy.
  • We expect revenue generated from OEMs to grow slower than the PC hardware market due to increased concentration among larger OEMs, consumer hardware shipments growing faster than business shipments, and relatively faster growth in emerging markets.

The company finished the quarter with $31.83 billion in cash. Microsoft reports that $35.3 billion remains on its $36.2 billion stock repurhcase authorization.

Source: Insight From Microsoft's 10-Q