Volume License Renewals, Tax Benefits Aid Q4'05

Strong PC and server sales and favorable tax changes helped Microsoft earn a record profit of US$3.70 billion on US$10.16 billion in revenues in the fourth quarter of fiscal year 2005 (which ended June 30, 2005). At the same time, full fiscal year revenue grew only 8%-the lowest rate in Microsoft’s history as a public company. However, growth in FY’06 should pick up to between 10% and 12%, thanks to a surge in revenue from volume license agreements and forthcoming products, such as SQL Server 2005 and Xbox 360.

(For an overview of Q4’05 financials and how they compare with previous quarters, see the chart “Microsoft Financials for the Last Five Quarters“.)

Strong Server Sales to Enterprises

After a lackluster Q3’05, the most recent quarter saw stronger year-over-year revenue growth in most of Microsoft’s business areas, thanks primarily to sales of server software to enterprises and strength in OEM PC sales.

(For a chart showing Q4’05 and Q4’04 revenue and profit or loss by business segment, see “Revenue and Profit (Loss) by Business Segment“.)