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Microsoft Reports Record Profits

Microsoft has announced revenue of $14.40 billion for the quarter ended March 31, 2007, a 32% increase over the same period of the prior year. This revenue drove record profits with operating income of $6.59 billion and net income of $4.93 billion. Diluted earnings per share for the quarter grew 72% to $0.50, and included $0.02 in tax benefits and $0.01 in legal charges. These results reflect $1.67 billion of revenue and operating income, $1.14 billion of net income and $0.12 of diluted earnings per share that were previously deferred primarily related to the technology guarantee programs for Windows Vista and the 2007 Microsoft Office release.

Net cash flow from operations was $7.29 billion and Microsoft returned $7.72 billion in cash to shareholders through share buybacks and dividends this quarter.

Microsoft management offers the following guidance for the quarter ending June 30, 2007:
Revenue is expected to be in the range of $13.1 billion to $13.4 billion.
Operating income is expected to be in the range of $5.0 billion to $5.2 billion.
Diluted earnings per share are expected to be $0.37 to $0.39.

Management offers the following preliminary guidance for the full fiscal year ending June 30, 2008:
Revenue is expected to be in the range of $56.5 billion to $57.5 billion.
Operating income is expected to be in the range of $22.0 billion to $22.5 billion.
Diluted earnings per share are expected to be in the range of $1.68 to $1.72.

Additional details on fiscal year 2008 guidance will be provided in the fourth quarter earnings announcement and during the company's Financial Analyst Meeting on the 26th of July.



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