Microsoft Sees Hike in Profit

By Reuters  |  Print this article Print

The software giant has buoyed the technology market, despite economic worries around the world, after posting profit of up by 79 percent.

By Daisuke Wakabayashi

SEATTLE (Reuters) - Microsoft signaled confidence to a rattled stock market by raising its full-year earnings outlook above Wall Street targets and reporting a 79 percent rise in quarterly profit on Thursday.

Analysts took the results as a good sign for technology companies in the face of a slowing economy, and Microsoft shares rose 4.5 percent in after-hours trade. That followed a 4 percent gain in regular trade, representing a gain of more than $26 billion in its market value for the day.

The results and raised forecasts from the world's largest software maker come on the heels of disappointing outlooks from tech bellwethers Intel Corpand Apple Inc, which sent shivers through a U.S. stock market that shed about 10 percent to start the year, before bouncing.

Microsoft reported bumper quarterly sales of its Windows Vista operating system and Office software on the back of strong computer sales, while its Xbox unit cashed in on new game titles that spurred hardware demand.

"It's clear that this new product cycle is paying off," said Andy Miedler, technology analyst at Edward Jones. "We're impressed that they had enough confidence to follow through and raised guidance."

Chief Financial Officer Chris Liddell told Reuters in an interview that the company was "a little cautious" about sales in North America for the remainder of its fiscal year. Liddell later told analysts on a conference call that there were no signs of any significant impact on Microsoft from a slowing U.S. economy.

"You have to look really hard to find any weakness in our results," said the usually-reserved Liddell.

Net profit in Microsoft's fiscal second quarter rose to $4.7 billion, or 50 cents per diluted share, from $2.6 billion, or 26 cents per diluted share, in the year-ago period. Revenue rose 30 percent to $16.37 billion.

Analysts, on average, had forecast 46 cents per share on revenue of $15.94 billion, according to Reuters Estimates.

The second-quarter revenue and profit growth rates are exaggerated by results a year before, when Microsoft deferred more than $1 billion in net income due to delays in releasing Vista and Office 2007, which hit stores in early 2007.


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