REDMOND, Wash. — July 19, 2012 — Microsoft Corp. today announced quarterly revenue of $18.06 billion for the quarter ended June 30, 2012. Operating income and loss per share for the quarter were $192 million and $0.06 per share.

The financial results reflect the previously announced non-cash, non-tax-deductible income statement charge of $6.19 billion for the impairment of goodwill and the deferral of $540 million of revenue related to the Windows Upgrade Offer. Adjusting for these items, non-GAAP fourth quarter revenue, operating income, and earnings per share were $18.60 billion, $6.93 billion, and $0.73 per share, which represented increases of 7%, 12%, and 6%, respectively, over the prior year period.

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“We delivered record fourth quarter and annual revenue, and we’re fast approaching the most exciting launch season in Microsoft history,” said Steve Ballmer, chief executive officer of Microsoft. “Over the coming year, we’ll release the next versions of Windows, Office, Windows Server, Windows Phone, and many other products and services that will drive our business forward and provide unprecedented opportunity to our customers and partners.”

“The combination of solid revenue growth and rigorous cost discipline drove double-digit operating income growth for the quarter, adjusting for the goodwill impairment and deferred revenue,” said Peter Klein, chief financial officer of Microsoft. “We are focusing our resources in strategic areas that will deliver shareholder value and long-term growth opportunities.”

For Microsoft’s fiscal year 2012, the company’s revenue, operating income, and earnings per share were $73.72 billion, $21.76 billion, and $2.00 per share. Adjusting for the goodwill impairment charge and deferred revenue, non-GAAP fiscal year 2012 revenue, operating income, and earnings per share were $74.26 billion, $28.50 billion, and $2.78 per share, which represented increases of 6%, 5%, and 5%, respectively, over adjusted non-GAAP fiscal year 2011 figures.

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The Server & Tools business revenue grew 13% for the fourth quarter and 12% for the full year. Enterprises are purchasing SQL Server and System Center to support their mission critical workloads and build their business intelligence and private cloud infrastructure. Windows Server 2012 will be available this September.

The Microsoft Business Division revenue grew 7% for the fourth quarter and 7% for the full year reflecting continued momentum in Office 2010 sales. Office is now installed on more than 1 billion PCs around the world. Earlier this week, we announced the customer preview of the new Microsoft Office.

The Windows & Windows Live Division revenue declined 13% for the fourth quarter and 3% for the full year. Adjusting for the impact of the Windows Upgrade Offer, Windows Division non-GAAP revenue declined 1% for the fourth quarter and 1% for the full year. Windows 7 adoption continued with more than 50% of worldwide enterprise desktops now running Windows 7. The next version of Windows will release to manufacturing this August and will become generally available October 26, 2012.

The Online Services Division revenue grew 8% for the fourth quarter and 10% for the full year reflecting growth in our search business. Bing organic U.S. search market share was 15.6% for the month of June 2012, up 120 points from the prior year period.

The Entertainment and Devices Division revenue grew 20% for the fourth quarter and 8% for the full year primarily reflecting the addition of Skype. Xbox has now been the top-selling console in the U.S. for 18 consecutive months. During the year, Xbox launched new television and video partnerships for Xbox LIVE, and announced Xbox SmartGlass, which connects phones, PCs, and tablets with the Xbox 360 console to enable more interactive and engaging entertainment.

“Delivering a record year takes great products, solutions, services, and tremendous execution by our people,” said Kevin Turner, chief operating officer of Microsoft. “Our enterprise business is firing on all cylinders and we couldn’t be more excited about the wave of innovation and new releases that position us well for the coming years.”

Business Outlook

Microsoft reaffirms fiscal year 2013 operating expense guidance of $30.3 billion to $30.9 billion.

Webcast Details

Peter Klein, chief financial officer, Frank Brod, chief accounting officer, and Bill Koefoed, general manager of Investor Relations, will host a conference call and webcast at 2:30 p.m. PDT (5:30 p.m. EDT) today to discuss details of the company’s performance for the quarter and certain forward-looking information. The session may be accessed at http://www.microsoft.com/investor/. The webcast will be available for replay through the close of business on July 19, 2013.

Adjusted Financial Results and Non-GAAP Measures

In addition to financial results reported in accordance with generally accepted accounting principles (GAAP), we have provided certain non-GAAP financial information to aid investors in better understanding the company’s performance. For fourth quarter fiscal year 2012 revenue, operating income, and earnings per share growth, we included the impact of revenue deferred during the fourth quarter of fiscal year 2012 relating to the Windows Upgrade Offer and excluded the impact of the goodwill impairment charge in the fourth quarter of fiscal year 2012.  For full year fiscal year 2012 revenue, operating income, and earnings per share growth, we included the impact of revenue deferred during the fourth fiscal quarter of fiscal year 2012 relating to the Windows Upgrade Offer, excluded the impact of the goodwill impairment charge in the fourth quarter of fiscal year 2012, and excluded the impact of the tax settlement benefit in the third quarter of fiscal year 2011.  Presenting these measures without the impact of these items gives additional insight into operational performance and helps clarify trends affecting the company’s business. For comparability of reporting, management considers this information in conjunction with GAAP amounts in evaluating business performance. These non-GAAP financial measures should not be considered as a substitute for, or superior to, the measures of financial performance prepared in accordance with GAAP.

About Microsoft

Founded in 1975, Microsoft (Nasdaq “MSFT”) is the worldwide leader in software, services and solutions that help people and businesses realize their full potential.

Forward-Looking Statements

Statements in this release that are “forward-looking statements” are based on current expectations and assumptions that are subject to risks and uncertainties. Actual results could differ materially because of factors such as:

• intense competition in all of Microsoft’s markets;

• execution and competitive risks in transitioning to cloud-based computing;

• Microsoft’s continued ability to protect its intellectual property rights;

• claims that Microsoft has infringed the intellectual property rights of others;

• the possibility of unauthorized disclosure of significant portions of Microsoft’s source code;

• cyber-attacks and security vulnerabilities in Microsoft products that could reduce revenue or lead to liability;

• improper disclosure of personal data that could result in liability and harm to Microsoft’s reputation;

• outages and disruptions of services provided to customers directly or through third parties if Microsoft fails to maintain an adequate operations infrastructure;

• government litigation and regulation affecting how Microsoft designs and markets its products;

• Microsoft’s ability to attract and retain talented employees;

• delays in product development and related product release schedules;

• significant business investments that may not gain customer acceptance and produce offsetting increases in revenue;

• unfavorable changes in general economic conditions, disruption of our partner networks or sales channels, or the availability of credit that affect demand for Microsoft’s products and services or the value of our investment portfolio;

• adverse results in legal disputes;

• unanticipated tax liabilities;

• quality or supply problems in Microsoft’s consumer hardware or other vertically integrated hardware and software products;

• impairment of goodwill or amortizable intangible assets causing a charge to earnings;

• exposure to increased economic and regulatory uncertainties from operating a global business;

• geopolitical conditions, natural disaster, cyber-attack or other catastrophic events disrupting Microsoft’s business; and

• acquisitions, joint ventures and strategic alliances that adversely affect the business.

For further information regarding risks and uncertainties associated with Microsoft’s business, please refer to the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors” sections of Microsoft’s SEC filings, including, but not limited to, its annual report on Form 10-K and quarterly reports on Form 10-Q, copies of which may be obtained by contacting Microsoft’s Investor Relations department at (800) 285-7772 or at Microsoft’s Investor Relations website at http://www.microsoft.com/investor/.

All information in this release is as of July 19, 2012. The company undertakes no duty to update any forward-looking statement to conform the statement to actual results or changes in the company’s expectations.

For more information, financial analysts and investors only:

Bill Koefoed, general manager, Investor Relations, (425) 706-4400

Note to editors: For more information, news and perspectives from Microsoft, please visit the Microsoft News Center at http://www.microsoft.com/news/. Web links, telephone numbers and titles were correct at time of publication, but may since have changed. Shareholder and financial information, as well as today’s 2:30 p.m. PDT conference call with investors and analysts, is available at http://www.microsoft.com/investor/.

REDMOND, Wash . — July 19, 2012 — Microsoft Corp. today announced that Mark Penn will join the company as Corporate Vice President, Strategic and Special Projects, with an emphasis on key consumer initiatives for the company. Penn will lead a small interdisciplinary team and report to Microsoft CEO Steve Ballmer.

“Mark has an incredible background in research, demographics, marketing and positioning and a proven history in developing unique insights that drive success,” Ballmer said. “With a strong set of products and an exciting pipeline for the next year, Mark’s experience and out-of-the-box thinking will help us more effectively reach new consumers and grow market share.”

Penn, 58, is currently the worldwide CEO of the public relations firm Burson-Marsteller and CEO of the polling firm Penn Schoen Berland LLC. He has been active in national and international politics at the highest levels and has served as strategic consultant to top Fortune 500 companies, including Ford Motor Company, Merck & Co. Inc., Intel Corp. and McDonald’s. He has consulted with Microsoft since 1998.

In addition, Penn is the author of “Microtrends: The Small Forces Behind Tomorrow’s Big Changes,” a New York Times and Wall Street Journal bestseller about the impact of small groups in politics, business and social change, building on his original identification of the “Soccer Moms” as a critical demographic bloc. He has also been a regular contributor to national publications such as TIME Magazine, Huffington Post and The Atlantic.

“I'm looking forward to applying my diverse skills and experience to some of the biggest new challenges in technology today, and there is no better place to do that than Microsoft,” Penn said.

At Microsoft, Penn will lead a cross-functional team focused on consumer initiatives and will draw on his experience in strategic development, branding and positioning to develop and deliver breakthrough ideas that meet consumers’ changing and dynamic needs. He will continue to write about consumer, demographic and social trends but will not be involved in public policy issues for Microsoft. Penn will remain based in Washington, D.C., but will spend substantial time in Redmond.

Founded in 1975, Microsoft (Nasdaq “MSFT”) is the worldwide leader in software, services and solutions that help people and businesses realize their full potential.

Note to editors: For more information, news and perspectives from Microsoft, please visit the Microsoft News Center at http://www.microsoft.com/news. Web links, telephone numbers and titles were correct at time of publication, but may have changed. For additional assistance, journalists and analysts may contact Microsoft’s Rapid Response Team or other appropriate contacts listed at http://www.microsoft.com/news/contactpr.mspx.

REDMOND, Wash. — July 18, 2012 — Attracted by the opportunity to improve efficiency while cutting IT costs, small to midsize businesses (SMBs) are rapidly adopting cloud computing, yet they continue to express concerns about privacy in the cloud, according to research released today by Microsoft Corp. Consequently, data protection policies and practices of cloud providers are figuring prominently in U.S. SMBs’ cloud-purchasing decisions.

Among the survey’s noteworthy findings:

• 65 percent of U.S. SMBs surveyed say cloud computing is “important” or “essential” for their organization today, and 81 percent say it will be two years from now.

• 59 percent said the privacy policies of cloud vendors impact their selection of cloud-service providers.

• The cloud policies and practices that SMBs care about most include transparency about location of data, segregation of data between customers, and commitments not to mine cloud data for advertising.

“Not long ago, the IT industry wondered if privacy concerns would prevent small and midsize companies from moving to the cloud. Our research indicates that is not the case,” said Brendon Lynch, chief privacy officer, Microsoft Trustworthy Computing. “Instead, SMBs are expressing their interest in data protection by using it as a way to evaluate potential cloud providers. This desire for transparency from our customers is one reason we created resources such as the Microsoft Office 365 Trust Center to clearly explain our cloud privacy, security and compliance commitment.”

The research shows that SMBs expect potential cloud providers to prove their commitment to privacy in several different ways:

• 51 percent insist on proof of compliance.

• 43 percent require the completion of a self-assessment checklist.

• 59 percent seek privacy provisions at the contract negotiation and legal review stages.

“It’s encouraging to hear SMBs asking the right questions of cloud providers,” said Jim Reavis, executive director, Cloud Security Alliance (CSA). “The CSA considers clear service-level agreements, proof of compliance and self-assessment checklists as best practices for conscientious cloud providers.”

To this end, the CSA created the Security, Trust & Assurance Registry (STAR) to help businesses assess cloud providers’ security and privacy capabilities. The STAR is a free, publicly accessible registry that documents the security controls provided by various cloud-computing offerings, thereby helping businesses assess the security of cloud providers. Since the STAR’s launch in December 2011, Microsoft has supported the registry by completing self-assessments for Microsoft Office 365, Windows Azure and Microsoft Dynamics CRM.

Seven hundred and sixty-nine privacy professionals in the U.S. with an average of 11 years working in IT, compliance, data security, risk management and privacy fields took part in the study, which was commissioned by Microsoft and conducted by The Ponemon Institute in April and May. Respondents were not screened according to which products or services they used, or aware of Microsoft’s involvement in the study.

The research was conducted in Denmark, Finland, Germany, Norway, Sweden and the United States. More information is available in the Microsoft Security, Privacy and Online Safety Newsroom and at http://www.microsoft.com/privacy.

Founded in 1975, Microsoft (Nasdaq “MSFT”) is the worldwide leader in software, services and solutions that help people and businesses realize their full potential.

Note to editors: For more information, news and perspectives from Microsoft, please visit the Microsoft News Center at http://www.microsoft.com/news. Web links, telephone numbers and titles were correct at time of publication, but may have changed. For additional assistance, journalists and analysts may contact Microsoft’s Rapid Response Team or other appropriate contacts listed at http://www.microsoft.com/news/contactpr.mspx.