Vista delay, coupons decrease Microsoft Q4 profits by $1.1 billion

Redmond (WA) - Microsoft today reported fourth quarter (fiscal Q2) revenues of $12.54 billion, up 6% from the year-ago quarter. Net earnings climbed to $2.63 billion, down about 28% from Q4 2005. However, the Q4 2006 earnings reflect $1.13 billion of deferred profits that is delayed into Q1 due to the delay of Windows Vista and Microsoft’s decision to hand out coupons for the operating system, which will debut on January 30.

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Microsoft said that Xbox 360, Microsoft SQL Server 2005, Visual Studio 2005 and Microsoft Dynamics CRM 3.0, which were released in Q4 2005 contributed more than $1.0 billion in revenue growth to the bottom line of the quarter result.

Especially the Xbox business has taken off for Microsoft with revenues of the Entertainment and Devices division climbing from $1.7 billion in Q4 2005 to $3.0 billion in Q4 2006. However, Microsoft was not able to reduce the loss of this segment, which was $286 million in Q4 2005 and $289 million in Q4 2006.

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