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2 Microsoft Units Post Losses After Charges

Posted on: Monday, 9 February 2004, 06:00 CST

Two of Microsoft Corp.'s previously profitable divisions lost money last quarter, the company disclosed.

The Server and Tools division, which includes the Windows operating system for computer servers, posted a $204 million operating loss in the three months ended Dec. 31, according to Microsoft's quarterly filing yesterday with the Securities and Exchange Commission.

But Microsoft said the division would have posted a profit in the quarter if not for a $651 million one-time charge against it as a result of a program in which Microsoft employees sold their otherwise worthless stock options to an investment bank. Quarterly revenue in the division was up 21 percent, to $2.13 billion.

The MSN division, which posted its first operating profit the previous quarter, also lost money because of the option program. Its loss for that quarter was $79 million, after a $144 million charge.

Microsoft reported companywide results last month but did not disclose divisional operating income for the quarter until yesterday.

The Client division, which includes Windows operating systems for desktop computers, posted quarterly operating income of $2.07 billion on revenue of $3.06 billion. The Information Worker division, including Microsoft Office and related products, reported income of $1.67 billion on revenue of $2.9 billion.

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