Microsoft (MSFT - commentary - Cramer's Take) reported another very solid quarter with its fiscal third-quarter results after the close Thursday night. More important, revenue guidance for its June quarter is above the current consensus.
Revenue In the quarter was $14.46 billion (flat year over year; -12% sequentially), and EPS was 47 cents. Last year's third quarter included a revenue deferral from the December quarter as part of the company's technology guarantee program. Excluding this gain, year-over-year revenue growth would have been 14%. GM was 82.6%, down 250 basis points year over year but up 420 basis points sequentially on lower Xbox hardware sales. OM was 30.5%, down more than 1500 basis points from last year and 910 basis points from the prior quarter due to a $1.5 billion fine paid to the European Union.
The balance sheet remains among the strongest of any company. CFO was $7.1 billion, comparable to last year's $7.30 billion. The cash account increased by more than $4 billion to $25.3 billion. A/R declined $1.8 billion, with DSOs declining 2 days to 62 days. In addition, the Unearned Revenue account was $12.1 billion on the balance sheet, flat with the second quarter, and the Contracted Not Billed value increased sequentially to more than $11.5 billion. The company estimated PC unit growth at about 8% to 10% vs. expectations of 9% to 11%, but overall bookings increase 14% from last year.
The Client segment was $4.03 buillion (-24% year over year; -7% sequentially), with operating margin of 76.9%. These numbers created a lot of controversy but after normalizing for last year's events, Client revenue actually increased 9% year over year. OEM license growth increased 5% year over year, down from prior levels, but Windows Vista licenses now stand at 140 million vs. only 100 million last quarter.
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