2007



To our shareholders, customers, partners and employees: 

 

Fiscal 2007 was an important and very successful year for Microsoft. Fueled by the launches of new versions of our flagship Microsoft® Windows® and Office products, the rollout of the biggest wave of business software in company history, and excellent momentum across a broad range of markets, we reached a significant milestone in 2007 when we surpassed $50 billion in revenue. For the year, revenue reached $51.12 billion, a 15 percent increase over fiscal 2006. Operating income totaled $18.52 billion, a jump of $2.05 billion compared with the previous year. During 2007, we returned $31 billion in cash to shareholders through stock buybacks and dividends. 

 

Results such as these cap a remarkable run that has seen profit double and revenue nearly double over the past five years. During that time, we have also returned more than $100 billion to shareholders. 

 

Fiscal 2007 saw many successful product launches, led by the release of Windows Vista®, the newest version of our desktop operating system. In fiscal 2007, we sold more than 55 million Windows Vista licenses. The 2007 Microsoft Office system also enjoyed an extremely successful launch, enabling us to sell more than 71 million Microsoft Office licenses in fiscal 2007. 

 

Other important launches included the business security product Microsoft Forefront™, the Microsoft System Center family of IT management solutions, and new versions of many of our Microsoft Dynamics™ business solutions. We also launched Zune™, our digital and music entertainment device; released Microsoft Windows Mobile® 6; and introduced Microsoft Silverlight, which enables developers to create rich, interactive media experiences and applications for the Web. 

 

During 2007, we acquired the global digital marketing company aQuantive. Valued at approximately $6 billion, it marks the largest acquisition in Microsoft’s history. aQuantive’s market-leading technology and its decade-long relationships with publishers and advertisers combined with our adCenter advertising platform will enable us to offer a world-class Internet-wide advertising platform along with tools, sales, support, and syndication to agencies, advertisers, and publishers. We also made a number of strategic acquisitions, including Tellme Networks, a leading provider of voice services for directory assistance, enterprise customer service and mobile search; ScreenTonic, a pioneer in mobile advertising and Medstory, which develops Web search technology for health information. 

 

Long-Term Success Built on Broad Innovation and Global Talent 

 

In 2007, we continued our 30-year commitment to innovation by investing $7.12 billion in research and development. The value of our investment in research and development can be seen in new products such as Microsoft Surface™, which provides a groundbreaking tabletop computing experience that lets people interact with digital content through natural gestures and touch, and Microsoft Robotics Studio, our revolutionary software development kit for the robotics industry. It also is evident in more established products such as the 2007