Windows 7 demand and solid execution led to record performance
- Record revenue and net income
- Revenue growth driven by Windows 7 consumer demand
- Continued cost discipline
- Adjusted EPS* growth of 28% over the comparable period last year
- Strong product pipeline into 2010 and beyond
Revenue increased mainly due to the launch of Windows 7 on October 22, 2009. Operating income increased reflecting increased revenue and decreased operating expenses in most categories.
• Cost of revenue decreased $279 million or 7%, primarily reflecting decreased Xbox 360 console costs and cost controls, offset in part by increased online costs, mainly traffic acquisition costs.
• Research and development decreased $211 million or 9%, primarily reflecting a decrease in third-party development and programming costs, a decrease in headcount, and the capitalization of certain software development costs.
• General and administrative expenses increased $293 million or 35%, primarily due to increased legal charges.
Diluted earnings per share increased primarily reflecting increased net income and share repurchases during the past 12 months.