MSFT » Topics » Microsoft Business Solutions

This excerpt taken from the MSFT 10-K filed Aug 25, 2006.

Microsoft Business Solutions

 

(In millions, except percentages)    2006    2005     2004    

Percent
Change 2006

versus 2005

  

Percent
Change 2005

versus 2004

Revenue

   $ 919    $ 784     $ 742     17%    6%

Operating income (loss)

   $ 24    $ (171 )   $ (291 )   *    41%
*   Not meaningful

Microsoft Business Solutions provides business management software solutions targeted to businesses of varying sizes. The main products consist of enterprise resource planning (“ERP”) solutions, customer relationship management (“CRM”) software, retail solutions, Microsoft Partner Program (“MSPP”), and related services. Microsoft Business Solutions also includes the Small and Mid-market Solutions and Partners (“SMS&P”), which focuses on sales to customers and partners in the small and mid-market customer segments. Revenue is derived from software and services sales, with software sales representing a significant amount of total revenue. Software revenues include both new software licenses and enhancement plans, which provide customers with future software upgrades over the period of the plan. Our solutions are delivered through a worldwide network of channel partners that provide services and local support.

Microsoft Business Solutions revenue increased in fiscal year 2006 driven by new users for Microsoft CRM and existing Dynamics ERP customers purchasing functionality and user licenses. The increase in Microsoft Business Solutions revenue in fiscal year 2005 was mainly due to 10% revenue growth in software partially offset by 25% decline in services revenue. The software revenue increase was driven by 9% growth in license revenue and 16% growth in enhancement revenue and was attributed to growth in ERP and CRM solutions and an increase in MSPP subscriptions.

Microsoft Business Solutions operating income increased in fiscal year 2006 reflecting the increase in revenue accompanied by a $56 million decrease in sales and marketing expense as a result of decreased net SMS&P spending. Headcount-related costs increased 3% reflecting both a 10% increase in headcount and an increase in salaries and benefits for existing headcount, partially offset by a decrease in stock-based compensation expense. Microsoft Business Solutions operating loss declined in fiscal year 2005 primarily due to a $175 million decline in stock-based compensation expense, an increase in product revenue, and a decline in amortization of acquired intangibles. The reduction in operating loss was partially offset by a net increase in sales and marketing expense driven by incremental costs in the SMS&P organization. In addition, we increased our marketing and product development spending in our ERP and CRM portfolios.

This excerpt taken from the MSFT 8-K filed Jul 20, 2006.

Microsoft Business Solutions

 

     Three Months
Ended
June 30,
    Percentage
Change
    Twelve Months
Ended
June 30,
    Percentage
Change
 

(In millions, except percentages)

   2006    2005       2006    2005    

Revenue

   $ 280    $ 242     16 %   $ 919    $ 784     17 %

Operating income (loss)

   $ 38    $ (84 )   145 %   $ 24    $ (171 )   114 %

Microsoft Business Solutions provides business management software solutions targeted to businesses of varying sizes. The main products consist of enterprise resource planning (“ERP”) solutions, customer relationship management (“CRM”) software, retail solutions, Microsoft Partner Program, and related services. Microsoft Business Solutions also includes the Small and Mid-market Solutions & Partners (“SMS&P”) organization, which focuses on sales to customers and partners in the small and mid-market customer segments. Revenue is derived from software and services sales, with software sales representing a significant amount of total revenue. Software revenues include both new software licenses and enhancement plans, which provide customers with future software upgrades over the period of the plan. Our solutions are delivered through a worldwide network of channel partners that provide services and local support.

Fourth Quarter

Microsoft Business Solutions revenue increased as a result of a $23 million or 15% growth in license revenue and a $13 million or 20% growth in enhancement plan revenue. License revenue growth was primarily driven by new users for Microsoft CRM and existing Dynamics ERP customers purchasing expanded functionality and additional user licenses. Enhancement plan revenue growth resulted primarily from renewals of Dynamics ERP products.


Microsoft Business Solutions operating income increased as a result of the revenue growth and a $78 million decrease in sales and marketing expenses as a result of decreased net SMS&P spending. Headcount-related costs increased 4% reflecting both a 10% increase in headcount and an increase in salaries and benefits for existing headcount, partially offset by a decrease in stock-based compensation expense.

Full Fiscal Year

Microsoft Business Solutions revenue increased as a result of an $85 million or 18% growth in license revenue and a $46 million or 18% growth in enhancement plan revenue. License revenue growth was driven by new users for Microsoft CRM and existing Dynamics ERP customers purchasing expanded functionality and additional user licenses. Enhancement plan revenue growth resulted primarily from Dynamics ERP products.

Microsoft Business Solutions operating income increased reflecting the increase in revenue accompanied by a $56 million decrease in sales and marketing expense as a result of decreased net SMS&P spending. Headcount-related costs increased 3% reflecting both a 10% increase in headcount and an increase in salaries and benefits for existing headcount, partially offset by a decrease in stock-based compensation expense.

This excerpt taken from the MSFT 10-Q filed Apr 27, 2006.

Microsoft Business Solutions

 

    

Three months

ended

March 31,


   

Percentage

Change


   

Nine months

ended

March 31,


   

Percentage

Change


 

(In millions, except percentages)


   2006

    2005

      2006

    2005

   

Revenue

   $ 216     $ 179     21 %   $ 639     $ 542     18 %

Operating loss

   $ (13 )   $ (39 )   67 %   $ (14 )   $ (87 )   84 %

 

Microsoft Business Solutions provides business management software solutions targeted to businesses of varying sizes. The main products consist of enterprise resource planning (“ERP”) solutions, customer relationship management (“CRM”) software, retail solutions, Microsoft Partner Program and related services. Microsoft Business Solutions also includes the Small and Mid-market Solutions & Partners organization, which focuses on sales to customers and partners in the small and mid-market customer segments. Revenue is derived from software and services sales, with software sales representing a large majority of total revenue. Software revenues include both new software licenses and enhancement plans, which provide customers with future software upgrades over the period of the plan. Our solutions are delivered through a worldwide network of channel partners that provide services and local support.

 

Microsoft Business Solutions revenue increased during the three months ended March 31, 2006 reflecting 28% growth in license revenue, primarily in the Dynamics ERP product lines, and 13% growth in enhancement plan revenue, while services revenue increased 15%. For the first nine months of fiscal year 2006, the 18% revenue increase was primarily due to 20% growth in license revenue and 17% growth in enhancement plan revenue from our Dynamics ERP and CRM solutions, while services revenue increased approximately 7%.

 

Microsoft Business Solutions operating loss decreased for the three and nine months ended March 31, 2006 reflecting the increase in revenue partially offset by an increase in sales and marketing expense. The increase in sales and marketing expense was primarily due to additional marketing spend as we continue to invest in demand creation and channel development. Headcount-related costs increased 2% and 3%, respectively, in the three and nine months ended March 31, 2006 reflecting both an increase in salaries and benefits for existing headcount and a 10% increase in headcount partially offset by a decrease in stock-based compensation expense.

 

We expect continued revenue growth through the Microsoft Business Solutions portfolio of business solutions through the end of the year. Continued investments in the next generation of solutions, broader geographical coverage, and plans to facilitate our partners providing customized vertical solutions are expected to result in continued reduction in the Microsoft Business Solutions operating loss in the fourth quarter of fiscal year 2006 and into fiscal year 2007.

 

24


Table of Contents
This excerpt taken from the MSFT 10-Q filed Jan 26, 2006.

Microsoft Business Solutions

 

    

Three months

ended

December 31,


   

Percentage

Change


   

Six months

ended

December 31,


   

Percentage

Change


 

(In millions, except percentages)


   2005

   2004

      2005

    2004

   

Revenue

   $ 242    $ 207     17 %   $ 423     $ 363     17 %

Operating income/(loss)

   $ 10    $ (17 )   *     $ (2 )   $ (48 )   96 %

* Not meaningful

 

Microsoft Business Solutions provides business management software solutions targeted to businesses of varying sizes. The main products consist of enterprise resource planning (“ERP”) solutions, customer relationship management (“CRM”) software, retail solutions, Microsoft Partner Program (“MSPP”), and related services. Microsoft Business Solutions also includes the Small and Mid-market Solutions & Partners (“SMS&P”) organization, which focuses on sales to customers and partners in the small and mid-market customer segments. Revenue is derived from software and services sales, with software sales representing a significant amount of total revenue. Software revenues include both new software licenses and enhancement plans, which provide customers with future software upgrades over the period of the plan. Our solutions are delivered through a worldwide network of channel partners that provide services and local support.

 

Microsoft Business Solutions revenue increased during the quarter ended December 31, 2005 due to 14% growth in license revenue and 24% growth in enhancement revenue. License revenue growth was supported by the release of Microsoft Dynamics CRM 3.0. For the first six months of fiscal 2006, the revenue increase was primarily due to 16% growth in license revenue and 20% growth in enhancement revenue from our ERP and CRM solutions and MSPP subscriptions, while services revenue increased approximately 3%.

 

Microsoft Business Solutions reported positive operating income for the second quarter of fiscal year 2006, mainly due to the revenue increase. Operating loss for the first half of fiscal year 2006 decreased mainly due to higher product revenue and a decline in acquisition amortization expense, partially offset by continued investments in sales and marketing.

 

We expect continued revenue growth through the Microsoft Business Solutions portfolio of business solutions and related product releases such as the releases of Microsoft Dynamics CRM, Microsoft Dynamics GP, and Microsoft Dynamics SL during the quarter. Continued investments in the next generation of solutions, broader geographical coverage, and plans for facilitating our partners to provide customized vertical solutions are expected to result in continued performance improvement over the prior year in fiscal year 2006.

 

This excerpt taken from the MSFT 10-Q filed Oct 27, 2005.

Microsoft Business Solutions

 

     Three months
ended
September 30,


   

Percentage

Change


 

(In millions, except percentages)


   2005

    2004

   

Revenue

   $ 181     $ 156     16 %

Operating loss

   $ (12 )   $ (31 )   61 %

 

21


Table of Contents

Microsoft Business Solutions provides integrated and adaptable business management software solutions optimized for small and mid-sized businesses, large organizations, and divisions of global enterprises. Microsoft Business Solutions products are developed to deliver affordable and rich functionality through an adaptable software platform that works like and with other Microsoft technologies. The main products consist of enterprise resource planning (“ERP”) solutions, customer relationship management (“CRM”) software, retail solutions, Microsoft Partner Program (“MSPP”) and related services. Microsoft Business Solutions also includes the Small and Mid-market Solutions & Partners (“SMS&P”) organization, which focuses on helping Microsoft, its customers, and industry partners in the small and mid-market customer segments. Revenue is derived from software and services sales, with software sales representing a significant amount of total revenue. Software revenues include both new software licenses and enhancement plans, which provide customers with future software upgrades over the period of the plan. Our solutions are delivered through a worldwide network of channel partners that provide specialized services and local support tailored to customer needs. The market for Microsoft Business Solutions is highly competitive, with a few strong players in the enterprise segment while the mid-market segment is more fragmented. In the first quarter of fiscal year 2006, we announced Microsoft Dynamics, a new brand for our financial, customer relationship, and supply chain management solutions that will replace Microsoft Business Solutions branding on subsequent product releases.

 

Microsoft Business Solutions revenue increased in the quarter ended September 30, 2005 primarily due to 18% growth in software revenue partially offset by a 3% decline in services revenue, which resulted from a strategic initiative to encourage our partners to provide more of these types of services. Performance from our ERP and CRM solutions and MSPP subscriptions resulted in growth of 21% in license and 16% in enhancement revenue.

 

Microsoft Business Solutions operating loss for the first quarter of fiscal year 2006 decreased mainly due to higher Microsoft Business Solutions product revenue and reduction in headcount-related costs driven by a decrease in stock-based compensation expense. This improvement has been partially offset by continued investments in the SMS&P organization.

 

Microsoft Business Solutions expects continued revenue growth through its portfolio of business solutions and related product releases, including newer applications such as Microsoft Office Small Business Accounting and the next major release of Microsoft Dynamics CRM. Continued investment in the next generation of solutions, broader geographical coverage, and plans for facilitating our partners to provide customized vertical solutions should result in improved business performance for Microsoft Business Solutions in fiscal year 2006, compared to fiscal year 2005.

 

This excerpt taken from the MSFT 10-K filed Aug 26, 2005.

Microsoft Business Solutions

 

(In millions, except percentages)    2003     2004     Percent
Change
    2005     Percent
Change
 

Revenue

   $ 631     $ 759     20 %   $ 803     6 %

Operating loss

   $ (148 )   $ (315 )   (113 )%   $ (201 )   36 %

 

Microsoft Business Solutions provides integrated and adaptable business management software solutions optimized for small and mid-sized businesses, large organizations and divisions of global enterprises. Microsoft Business Solutions products are developed to deliver affordable and rich functionality through an adaptable software platform

 

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Table of Contents

 Part II 

Item 7

 

 

 

that works like and with other Microsoft technologies. The main products consist of a line of business solutions, customer relationship management software, retail solutions, and related services. Revenue is derived from software and services sales, with software sales representing a significant amount of total revenue. Software revenues include both new software licenses and enhancement plans, which provide customers with future software upgrades over the period of the plan. Our solutions are delivered through a worldwide network of channel partners that provide specialized services and local support tailored to customer needs. The market for Microsoft Business Solutions is highly competitive, with a few strong players in the enterprise segment while the mid-market segment is more fragmented. Microsoft Business Solutions now includes the SMS&P organization, which previously had been included in Information Worker. SMS&P supports small and mid-market customers for Microsoft including Microsoft Business Solutions. Results have been restated to reflect the reclassification of SMS&P for all periods presented. Also as a result of the reorganization, the Microsoft Partner Program became a component of Microsoft Business Solutions.

The increase in Microsoft Business Solutions revenue in fiscal year 2005 was mainly due to a 10% revenue growth in software partially offset by a 25% decline in services revenue, which resulted from encouraging our partners to provide more of these types of services. The software revenue increase was driven by a 9% growth in license revenue and 16% growth in enhancement revenue as compared to the previous year, and is attributed to growth in our line of business solutions and customer relationship management solutions, and increased Microsoft Partner Program subscriptions. The revenue increase in fiscal year 2004 was primarily attributable to continued growth in licensing of Navision and Axapta line of business solutions, new sales of Microsoft CRM, and Microsoft Partner Program subscriptions.

Microsoft Business Solutions operating loss declined in fiscal year 2005 primarily due to a decline in stock-based compensation expense, an increase in product revenue, and a decline in acquisition intangibles amortization. The reduction in operating loss was partially offset by a net increase in sales and marketing expense driven by incremental headcount and marketing costs in the SMS&P organization. In addition, there has been an increase in marketing and product development investments in our portfolio of business solutions. The operating loss for fiscal year 2004 increased from fiscal year 2003 due to an increase in stock-based compensation expense from the employee stock option transfer program in the second quarter of fiscal year 2004, partially offset by an increase in revenue and lower operating expenses including $42 million of lower intangibles amortization costs.

Microsoft Business Solutions expects continued revenue growth through its portfolio of business solutions and related product releases, including newer applications such as Microsoft Office Small Business Accounting and Microsoft CRM. Continued investment in the next generation of solutions, broader geographical coverage, and plans for facilitating our partners to provide customized vertical solutions should result in improved business performance for Microsoft Business Solutions in fiscal year 2006.

 

This excerpt taken from the MSFT 8-K filed Jul 21, 2005.

Microsoft Business Solutions

 

     Three months ended June 30,

          Year ended June 30,

       

(In millions, except percentages)


       2004    

        2005    

    Percent
Change


        2004    

        2005    

    Percent
Change


 

Revenue

   $ 223     $ 247     11 %   $ 759     $ 803     6 %

Operating loss

   $ (70 )   $ (76 )   (9 )%   $ (315 )   $ (201 )   36 %

 

Microsoft Business Solutions provides integrated and adaptable business management software solutions optimized for small and midsize businesses, large organizations and divisions of global enterprises. Microsoft Business Solutions products are developed to deliver affordable and rich functionality through an adaptable software platform that works like and with other Microsoft technologies. The main products consist of a line of business solutions, customer relationship management software, retail solutions and related services, as well as the Microsoft Partner Program. Revenue is derived from software and services sales, with software sales representing a significant amount of our total revenue. Software revenues include both new software licenses and

 

13


enhancements plans, which provide customers with future software upgrades over the period of the plan. Our solutions are delivered though a worldwide network of channel partners that provide specialized services and local support tailored to customer needs. The market for Microsoft Business Solutions is highly competitive, with a few strong players in the enterprise segment while the midmarket segment is more fragmented. Microsoft Business Solutions now includes the SMS&P organization, which previously had been included in Information Worker. SMS&P supports small and midmarket customers for Microsoft including Microsoft Business Solutions. Results have been restated to reflect the reclassification of SMS&P for all periods presented. Also as a result of the reorganization, the Microsoft Partner Program became a component of Microsoft Business Solutions.

 

Fourth Quarter

 

The increase in Microsoft Business Solutions revenue in the quarter ended June 30, 2005, as compared with the corresponding period in the previous year, was primarily due to 12% growth in software revenue partially offset by a 16% decline in services revenue, which resulted from encouraging our partners to provide more of these types of services. Performance from our line of business solutions, our customer relationship management solution, and the Microsoft Partner Program subscriptions resulted in growth of 12% in both license and enhancement revenue.

 

Microsoft Business Solutions operating loss for the fourth quarter of fiscal year 2005 increased from the corresponding period in fiscal year 2004 mainly due to a net increase in sales and marketing expenses related to investments in SMS&P. The increase in operating expense was partially offset by higher Microsoft Business Solutions product revenue.

 

Full Fiscal Year

 

The increase in Microsoft Business Solutions revenue in fiscal year 2005 was mainly due to 10% revenue growth in software partially offset by a 25% decline in services revenue, which resulted from encouraging our partners to provide more of these types of services. The software revenue increase was driven by 9% growth in license revenue and 16% growth in enhancement revenue as compared with the previous year, and is attributed to growth in our line of business solutions and customer relationship management solutions, as well as increased Microsoft Partner Program subscriptions.

 

Microsoft Business Solutions operating loss declined in fiscal year 2005 primarily due to a decline in stock-based compensation expense, an increase in product revenue, and a decline in acquisition amortization. The reduction in operating loss was partially offset by a net increase in sales and marketing expense driven by incremental headcount and marketing costs in the SMS&P organization. In addition, there has been an increase in marketing and product development investments in our portfolio of business solutions.

 

This excerpt taken from the MSFT 10-Q filed Apr 28, 2005.

Microsoft Business Solutions

 

    

Three months

ended

March 31,


   

Percent
Change


   

Nine months

ended

March 31,


   

Percent
Change


 

(In millions, except percentages)


   2004

    2005

      2004

    2005

   

Revenue

   $ 179     $ 185     3 %   $ 536     $ 556     4 %

Operating loss

   $ (52 )   $ (54 )   (4 )%   $ (245 )   $ (125 )   49 %

 

Microsoft Business Solutions are integrated adaptable business applications and services that allow small and mid-sized businesses, large organizations, and divisions of global enterprises to connect employees, customers, and suppliers. Microsoft Business Solutions products consist of Microsoft Great Plains, Microsoft Navision, Microsoft Axapta, Microsoft Solomon, Microsoft CRM, Microsoft Retail Management, other business applications, and the Microsoft Partner Program. The financial management, customer relationship management, supply chain management, and analytics applications work with Microsoft products such as Office and Windows to streamline processes across an entire organization. Microsoft Business Solutions are delivered through a worldwide network of channel partners that provide specialized services and local support tailored to a company’s needs. As announced in the fourth quarter of fiscal 2004, Microsoft Business Solutions now includes the SMS&P organization, which previously had been included in Information Worker. Microsoft Business Solutions results have been restated to reflect the reclassification of SMS&P for all periods presented. Also as a result of the reorganization, the Microsoft Partner Program became a component of Microsoft Business Solutions.

 

Microsoft Business Solutions revenue increased in the third quarter of fiscal 2005 as compared with the corresponding period in the prior year due to growth in new licenses, renewed license agreements, and Microsoft Partner Program subscriptions, which was offset by declines in our services revenue and online business. The decline in service revenue results from channel partners offering services previously provided by Microsoft Business Solutions. For the first nine months of fiscal 2005, the revenue increase was primarily due to an increase in software revenue from Microsoft business management applications and Microsoft Partner Program subscriptions.

 

Microsoft Business Solutions operating loss increased for the three months ended March 31, 2005 as compared with the corresponding period in the prior year primarily driven by higher headcount-related costs primarily associated with incremental hiring across the SMS&P organization along with increased marketing efforts that were partially offset by revenue growth. For the nine months ended March 31, 2005, the operating loss declined due to a combination of increased revenues, reduced stock-based compensation and acquisition amortization expenses, partially offset by increased headcount costs from hiring and increases in salary, and increases in channel marketing expenses.

 

Microsoft Business Solutions is committed to further developing its product offerings, with recently released versions of major products including Microsoft Great Plains 8.0 and the recent Extensions release, Microsoft Solomon 6.0, and Microsoft Navision 4.0. We expect revenue and share growth in the business applications market through continued investments in product innovation and our network of channel partners.

 

This excerpt taken from the MSFT 10-Q filed Jan 27, 2005.

Microsoft Business Solutions

 

     Three months
ended
December 31,


   

Percent
Change


   

Six months
ended

December 31,


   

Percent
Change


 

(In millions, except percentages)


   2003

    2004

      2003

    2004

   

Revenue

   $ 210     $ 211     0 %   $ 357     $ 371     4 %

Operating loss

   $ (139 )   $ (29 )   79 %   $ (193 )   $ (70 )   64 %

 

Microsoft Business Solutions develops and markets business applications and related services designed to help small and mid-sized companies, large corporations and divisions of global enterprises efficiently use, manage, and analyze business resources. Microsoft Business Solutions products consist of Microsoft Great Plains, Microsoft Navision, Microsoft Axapta, Microsoft Solomon, Microsoft CRM, Microsoft Retail Management, other business applications, and the Microsoft Partner Program. Microsoft Business Solutions revenue is affected by the general economic environment, and enterprise information technology spending in particular. As announced in the fourth quarter of fiscal 2004, Microsoft Business Solutions now includes the SMS&P organization, which previously had been included in Information Worker. Microsoft Business Solutions results have been restated to reflect the reclassification of SMS&P for all periods presented. Also as a result of the reorganization, the Microsoft Partner Program became a component of Microsoft Business Solutions.

 

Microsoft Business Solutions revenue remained flat in the second quarter of fiscal 2005 as compared with the corresponding period in the prior year. Growth in new licenses, renewed license agreements, and the Microsoft Partner Program subscriptions were offset by declines in services revenue and online business. Revenue from all of our business management applications grew quarter over quarter in both licenses and enhancements. The decline in service revenue is mainly attributed to a shift in our focus to encourage our partners to offer more of these services. For the first six months of fiscal 2005, the revenue increase was primarily due to an increase in revenue from Microsoft business management applications.

 

Microsoft Business Solutions operating loss declined for the three and six months ended December 31, 2004 as compared with the corresponding periods in the prior year primarily due to a decrease in stock-based compensation expense. The operating loss in the same time periods also declined from the comparable period in fiscal 2004 due to reduced acquisition amortization expenses and higher Microsoft Business Solutions product revenue.

 

Microsoft Business Solutions is committed to further developing its product offerings, with recently released product versions including Microsoft Great Plains 8.0 and Microsoft Solomon 6.0. In the second quarter of fiscal 2005, we launched Microsoft Navision 4.0, available in 39 languages and 41 localized versions. In addition, in the third quarter of fiscal 2005, we released Microsoft Business Solutions Small Business Financials North America Edition, a solution for small companies that require more than basic accounting software.

 

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