Microsoft News Tracker

Microsoft beat Wall Street expectations today when it announced its fiscal 1Q08 results:

On Thursday, Microsoft reported first quarter earnings of $4.29 billion, or 45 cents a share, on revenue of $13.76 billion. That sum easily beat Wall Street estimates of 39 cents a share on revenue of $12.57 billion, according to Thomson Financial.

Revenue was up 27 percent from a year ago–Microsoft’s best growth since 1999. Microsoft got a nice bump from Vista, Office and Halo.

As for the outlook, Microsoft also impressed Wall Street. The company projected revenue between $15.6 billion to $16.1 billion and earnings between 44 cents a share and 46 cents a share. Wall Street was expecting earnings of 44 cents a share on revenue of $15.6 billion. For the fiscal year ending June 30, Microsoft projected earnings of $1.78 a share to $1.81 a share on revenue between $58.8 billion to $59.7 billion. Wall Street was projecting earnings of $1.73 on revenue of $57.4 billion.

Below are the segment breakouts with some brief commentary based on the 10-Q, but the spoiler is that the usual Microsoft cash cows came through big time.

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Among the unanswered questions surrounding yesterday’s Microsoft-Facebook deal was whether there were any other investors besides Microsoft in this round of financing. Now rumors are circulating that two hedge funds also chipped in for an additional $500 million.

The early (and possibly incorrect) presumption is that the hedge funds are each getting an equity share equivalent to Microsoft’s %1.6, but of course they aren’t getting any of the ad business. That in turn raises another unanswered question: what kind of advertising revenue share did Microsoft give Facebook? Both parties are taking pains to maintain the fiction of two separate Microsoft-Facebook deals in order to preserve the pristine nature of the $15 billion valuation, but one can’t help but wonder how much Microsoft really paid in total to play with Facebook.

Update 11/1: Facebook board member and investor Jim Breyer says this rumor is incorrect.