Thursday, July 19, 2007

Microsoft Conference Call Summary

Co says XBOX warrenty charge was 1.06 bln, accounting for 15% of the cost of rev... Business Segment Guidance: Co expects PC unit growth for fy08 to be 9-11% and 11-3% for Q1, est growth rates will continue to be higher in the Consumer segment than in the Business segment.

For Client unit co expects fy08 growth to be 9-10%, and q1 growth of 15-16%. For q1 co expects OEM rev to grow faster than the PC hardware mkt due to a higher premium mix a year-ago quarter and to be in line for the full year. On Commercial and Retail business, co expects double-digit growth for both q1 and the yr from continued demand through vol licensing channels. Online Services business revs to increase 10-13% for the yr and 10-11% in Q1. This implies ad growth in excess of 20% for the year and for the qtr.

Server and Tools rev to be 14-15% for the yr and 11-12% for q1. For Entertainment and Devices division, forecasting rev growth of 10-19% for the yr and 30-40% for Q1. Business division rev should be 11-12% for the yr and 14-15% in q1... Co expects a sequential decrease in unearned rev from Q4 to Q108 to be about 10%, due to the large amount of billings in q4. Co expects to sell over 20 mln licenses for Windows Mobile-based phone.

Total operating income for fy08 is expected to be between $22.2-22.7 bln; the high rev forecast is responsible for the improvement vs April operating income guidance. For q1, co expects operating income to be between $5-5.2 bln... Q&A: Sequential underlying ad rev was up 33%, display business growth rate even better, assisted by one-off impacts. Co says Vista adoption independent of SP1 launch. Co expects a mix shift in the Premium segment towards the Consumer Premium, but the overall Premium mix for the co to be relatively healthy and in the "70%-odd range" and says it is sustainable, but with a change inside Business and Consumer. Co expects to grow OEM units at the top end of 9-11% pc range. Longhorn expected to ship 2h 07. Courtesy of

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