Q4 Revenue Stable, Unearned Revenue Grows

Microsoft reported net income of US$1.53 billion on US$7.25 billion in revenues in the final quarter of fiscal year 2002 (which ended June 30, 2002). Although earned revenue was flat compared with the previous quarter, unearned revenue continued to skyrocket as more corporate customers signed up for multiyear licensing programs. Profits continued to suffer thanks to writedowns on the value of Microsoft’s strategic investments, particularly AT&T.

Microsoft also announced changes to the way it will report earnings in FY’03 to better reflect its changing business. The company will now disclose exactly how much of its current unearned revenue it will book in future quarters, and it will report quarterly earned revenue in five new categories: Knowledge Worker, Client, Server, MSN, and Home & Entertainment. (For details about these categories and historical financial data for them, see the chart “Last Five Quarters’ Revenues by Product Line (New Categories)“.)