Microsoft on Thursday announced revenue of $15.84 billion for the fiscal fourth quarter ended June 30, 2008, an 18% increase over the same period of the prior year. Operating income and diluted earnings per share for the quarter were $5.68 billion and $0.46, representing growth of 42% and 48%, respectively, benefiting from the drop out of 2007 Xbox-related charges. However, net income for the quarter and the outlook were weaker than expected with a lower level of business application sales forecast after a worse than expected result in the quarter. The shares fell more than 5% in after-hours trading.

For the fiscal year ended June 30, 2008, Microsoft announced revenue of $60.42 billion, an 18% increase over the prior year. Operating income and diluted earnings per share for the year were $22.49 billion and $1.87, representing yearly growth of 21% and 32%, respectively.

The growth rates for operating income and diluted earnings per share were impacted by a $1.1 billion charge in the fourth quarter of fiscal year 2007 related to the expansion of the company’s Xbox 360 warranty coverage.

“Delivering $60 billion in annual revenue is an outstanding accomplishment and a testament to the powerful combination of great technology solutions and strong execution by our partners and global sales and marketing teams,” said Kevin Turner, Chief Operating Officer at Microsoft.  “The outlook for fiscal year 2009 is positive given the breadth of our impressive technology portfolio and the expanding collection of online services we are bringing to market.”

This fiscal year marked the launch of Microsoft’s flagship server products: Windows Server 2008, SQL Server 2008 and Visual Studio 2008. Revenue growth was primarily driven by continued customer demand for all products, including Windows Vista, which has sold over 180 million licenses since launch, the 2007 Microsoft Office system, server software, and Xbox 360 consoles and games.

“We had a strong finish in the fourth quarter, which capped off an impressive year for the company. We grew revenue 18% for the year with earnings per share significantly outpacing that,” said Chris Liddell, Chief Financial Officer at Microsoft.  “Looking forward, despite difficult economic conditions, we will build upon the momentum exiting fiscal year 2008 and expect to deliver another year of double-digit revenue and earnings growth in fiscal year 2009.”

In online services, sales rose 24% but the unit posted a loss of $488 million. Microsoft's research and development spending grew 24% to $2.41 billion.

The company expects fiscal first-quarter per-share earnings of 47 cents to 48 cents on revenue of $14.7 billion to $14.9 billion, compared with Wall Street's view of 49 cents on revenue of $15.04 billion.

Full Results