Microsoft announced record revenues for the quarter ending December 31; the company raked in $8.54 billion, a 10 percent increase over the same quarter a year earlier. In addition, the company announced its first-ever annual dividend and approved a two-for-one split of Microsoft common stock. All in all, the quarter was another bravura financial performance by the software giant, which has consistently bucked economic trends while its competitors struggle to keep up.

Microsoft reported net income for the quarter of $2.55 billion, which includes a $282 million after-tax charge for investment impairments and a $126 million one-time tax benefit relating to a favorable tax court ruling. This number compares with a net income of $2.28 billion in the same quarter the previous year. Microsoft saw revenues from its server platforms grow 12 percent in the quarter, thanks to strong sales of Windows 2000 Server and Windows 2000 Advanced Server. With growth of more than 40 percent, Microsoft SQL Server 2000 was another bright spot.

"The company delivered solid results in every business despite a challenging global economic environment," said Microsoft chief technology officer (CTO) John Connors. "During the quarter we also launched a broad range of products and services, including MSN 8, Tablet PC, Windows XP Media Center Edition, Xbox Live, and Windows Powered Smartphone. While we are very optimistic about the future of the technology sector, we do not expect to see a significant upturn in global IT spending in the short term."

Microsoft also announced an annual dividend of 16 cents per share presplit, payable to shareholders on March 7, 2003, and a stock split, the company's ninth since going public in 1986. As a result of the split, on January 27, Microsoft shareholders will receive one additional common share for every share held.

"Declaring a dividend demonstrates the board's confidence in the company's long-term growth opportunities and financial strength," Connors said. "We are especially pleased to be able to return profits to our shareholders, while maintaining our significant investment in research and development and satisfying our long-term capital requirements." In the past, Microsoft executives fought the idea of paying a dividend, arguing that the company needed its on-hand cash to fund growth and pay for potentially expensive legal settlements. However, the company recently settled its most damaging legal case, a class-action lawsuit in California, at little actual cost.