Q2 Record Sales Offset by Higher Costs

Microsoft posted record revenues of US$7.74 billion in the second quarter of FY’02 (ending Dec. 31, 2001), representing an 18% increase over the same quarter last year. Nonetheless, net income was down from last year’s figure, thanks mainly to a US$660 million charge stemming from a proposed legal settlement. Microsoft Chief Financial Officer John Connors adjusted earnings expectations for FY’02 slightly downward, blaming a weaker-than-expected PC market, particularly in Japan.

XP, Xbox Help Revenue Growth

Revenue from desktop platforms was up 24% over the same quarter last year, driven by the introduction of Windows XP and a higher percentage of enterprises adopting Windows 2000 or XP Professional desktops (as opposed to NT or Windows 9x). Microsoft trumpeted XP as its most successful operating system launch ever, with more than 17 million copies sold since its introduction in Sept. 2001. By comparison, Windows 95 sold 19 million copies in 1996 (its first complete year on the market), and Windows 98 sold an estimated 11 million copies in the six months it was out in 1998, according to market research firm IDC.