Q4'03 Shows Companywide Growth

All seven of Microsoft’s business segments saw revenue growth in the fourth quarter of fiscal year 2003, which ended June 30, 2003. However, this growth was offset by a US$796 million one-time charge related to settling the AOL antitrust lawsuit and by a sharp increase in sales and marketing expenses. Thanks to these expenses, Q4’03 showed only US$2.19 billion in operating income (revenue minus everyday expenses), which is the lowest figure since Q1’99.

(For an overview of Q4’03 financials and how they compare with previous quarters, see the chart “Financials for the Last Five Quarters“.)

Sales and Marketing Expenses Higher

One of the most notable results in Q4’03 was a significant jump in sales and marketing expenses to a record US$2.10 billion—up from US$1.49 billion in the previous quarter and US$1.53 billion in Q4’02. Microsoft attributed this spike to marketing costs for Windows Server 2003, advance marketing for Office System 2003, and accelerated activity in the new Small and Mid-Market Solutions and Partners division (a sales force focused on small and mid-size businesses).