Microsoft Posts Steep Rise in Quarterly Profit

Microsoft Corp.’s fiscal third-quarter profit jumped 85% to $1.04 billion, well beyond analysts’ expectations, on strength in its core business, including sales of its Office 97 upgrade, the world’s largest software company reported Thursday.

Net income climbed to $1.04 billion, or 79 cents a share, from $562 million, or 44 cents, in the year-earlier period. Revenue rose 45% to $3.21 billion for the quarter ended March 31, up from $2.21 billion. The earnings easily topped Wall Street’s consensus analyst forecast of 64 cents a share, according to Wall Street analysts.

Microsoft Chief Financial Officer Mike Brown reiterated that he expects results in the current fourth quarter to be similar to the quarter ended March 31, which he termed “sizzling.”

But in an interview, Brown also said he expects Microsoft’s growth to slow over the next five quarters based on difficult comparisons with year-earlier quarters and a lack of planned major new upgrades.

Microsoft released its latest results after financial markets closed. In after-hours trading, the Redmond, Wash.-based company’s stock rose to $102.75 after slipping 12.5 cents to $98.125 in regular trading on Nasdaq.

Office 97, the latest upgrade of the company’s best-selling software package, was released in January. It combines “productivity applications,” such as word processing and spreadsheets that accounted for an estimated $2 billion of the company’s $8.7 billion in the prior fiscal year.

Microsoft makes the bulk of its money from “platforms,” including the operating systems preloaded onto new personal computers, which generate about one-third of the company’s revenue.

“However,” Brown cautioned, “incredible results like these are seldom duplicated, and we are mindful of the very tough comparisons we will have in fiscal 1998.”

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Lucent Technologies Inc. said it earned $66 million in the fiscal second quarter, rebounding from a year-ago loss amid strong sales of wireless systems, software and switching systems.

The telecommunications equipment giant said profit came to 10 cents a share. That contrasted with a loss of $103 million, or 16 cents a share, in the same period last year, when its spinoff from AT&T; Corp. resulted in restructuring costs.

At a Glance:

Digital Equipment Corp. said it earned $51 million, or 27 cents a share, in its third quarter, down sharply from $124 million, or 74 cents, a year earlier but slightly better than what Wall Street had expected. The manufacturer of computer chips and computer systems and provider of computer services said its sales fell to $3.3 billion from $3.6 billion.

Silicon Graphics Inc. reported fiscal third-quarter net income of $10.5 million, or 6 cents a share, including $6 million in charges relating to its merger with Cray Research. A year ago, it earned $53 million, or 31 cents.

Xylan Corp. reported first-quarter net income of $5.9 million, or 13 cents a share, compared with $2.7 million, or 6 cents, in the year-ago quarter.

Infoseek Corp. reported a first-quarter net loss of $4.1 million, or 16 cents, compared with a loss of $3.6 million, or 14 cents, a year ago.

MetaTools Inc. reported first-quarter net income of $81,000, or 1 cent a share, compared with $724,000, or 6 cents, a year ago.

Sybase Inc. reported first-quarter earnings of $3.5 million, or 5 cents a share, compared with a loss of $6.9 million, or 9 cents, a year ago.

VLSI Technology Inc. reported first-quarter net income of $9.0 million or 19 cents a share, compared with $3.2 million, or 7 cents, a year ago.

MORE EARNINGS: D3