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Consumers Help Microsoft

Back-to-school PC sales did what corporate IT spending couldn't in lifting Microsoft's sales for the quarter ended Sept. 30. On the strength of consumer demand for PCs and Xbox game consoles, revenue grew 6%, to $8.2 billion, compared with the same period a year earlier, while net income climbed to $2.61 billion. License sales of client operating systems and desktop apps were flat in Microsoft's first fiscal quarter of 2004. CFO John Connors says business spending held back the results. Concerns over software vulnerabilities and IT security caused some companies to hold back. "Security concerns after [some] high-profile attacks diverted the focus of our customers, sales force, and channel from renewals," Connors said. One effect: Unearned revenue from multiyear license agreements dropped in the quarter.

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