Windows surprisingly strong in Microsoft’s $20.6B fourth quarter

(credit: Julien GONG Min)

Microsoft posted revenue of $20.6 billion in the fourth quarter of its 2016 financial year, a decline of 7 percent year on year. Operating income was $3.1 billion, compared to a $2.1 billion loss in the same quarter last year. Net income was also $3.1 billion, as compared to a $3.2 billion loss, and earnings per share were $0.39.

The full 2016 financial year figures were revenue of $85 billion, down 9 percent year on 2015, operating income of $20.2 billion, up 11 percent, net income of $16.8 billion, up 38 percent, and earnings per share of $2.79, up 42 percent. Those 2015 losses were substantially a result of the $7.6 billion write-down of Nokia’s assets. 2016 also included a further, final Nokia-related write-down but this one was a mere $950 million.

The company offers non-GAAP financials wherein all Windows 10 revenue is booked at the point of sale, rather than allocated piecemeal over two to four years (with the exact timeframe depending on the customer type). The revenue deferrals are due to the “Windows as a Service” model wherein support and development commitments for the operating system are an ongoing task that continues after the sale of the software license. The non-GAAP results also change how the company accounts for impairment, integration, and restructuring charges. Under this alternative reporting regimen, revenue for the quarter was was up 2 percent to $22.6 billion, operating income was down 3 percent to $6.2 billion, and net income was up 8 percent to $5.5 billion.

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