Microsoft Profit Jumps 28%, Beats Expectations
Microsoft Corp. on Thursday said its fiscal fourth-quarter profit rose 28%, beating forecasts, as the software powerhouse turned in strong sales of its Office and Windows NT programs and got a lift from its new Windows 98.
Earnings for the company--whose 82% stock rise so far this year has been one of the main reasons for the Nasdaq composite index surpassing the 2,000 level Thursday--climbed to $1.36 billion, or 50 cents a diluted share, from $1.06 billion, or 40 cents, a year earlier. Analysts expected a profit of 48 cents. Sales for the quarter ended June 30 rose 26%, to $4 billion from $3.18 billion.
Microsoft sold more of its mainstay Office 97 software and said sales of Windows 98, the successor to its pervasive Windows 95 computer operating system, have been strong since the software’s debut June 25. The jump in revenue pushes Microsoft past IBM Corp. as the world’s top software maker and contrasts with lagging sales and earnings from bellwethers Compaq Computer Corp. and Intel Corp.
“The revenue was a good deal ahead of expectations,” said Brett Berry, a portfolio manager at Bailard, Biehl & Kaiser. Analysts had been looking for revenue of about $3.8 billion for the quarter.
Microsoft shares were unchanged at $117.38 in Nasdaq trading after touching a record $118.88 earlier Thursday.
The Redmond, Wash.-based company said more than 1 million copies of Windows 98 were sold in stores in North America.
“A great year for all of our major products was capped by strong initial results from Microsoft Windows 98,” Greg Maffei, chief financial officer, said in a statement.
The company said it recognized $150 million in revenue from Windows 98.
Microsoft’s sales and profit increases contrast with a string of earnings declines from high-tech bellwethers, including Intel, Compaq and Motorola Inc. Intel and Motorola blamed flagging chip sales for their drops, while Compaq cited price-cutting to clear out inventory.
At a Glance:
* Sun Microsystems Inc., the largest maker of computer workstations, said fiscal fourth-quarter profit rose 21% as strong sales in the U.S. and Europe offset a slump in Japan and Asia.
Sun earned $287.8 million, or 73 cents a diluted share, before a charge, up from $237.2 million, or 61 cents, in the year-earlier period. Profit topped analysts’ expectations of 71 cents for the quarter ended June 30. Sales rose 13% to $2.88 billion from $2.54 billion.
The strong results show that Sun is competing successfully against rivals Hewlett-Packard Co. and IBM in the market for machines used to run computer networks. Some analysts expect Sun to pick up more sales because of an expected delay in Microsoft’s Windows NT software, an operating system that competes with Sun’s own.
* Excite Inc. said its second-quarter loss narrowed, beating expectations, as the No. 2 Internet search engine tripled sales on advertising and its partnership with Netscape Communications Corp.
The Redwood City, Calif.-based company said its loss before charges was $4.6 million, or 10 cents a share, compared with $6.4 million, or 26 cents, a year earlier. The company was expected to lose 39 cents.
* Sybase Inc. posted a second-quarter profit as a cost-cutting effort boosted the software company’s bottom line and enabled it to beat Wall Street forecasts that it would post yet another loss. The Emeryville, Calif.-based company said it earned a profit of $450,000, or 1 cent per share, for the quarter ended June 30, contrasted with a loss of $17.8 million, or 23 cents, in the second quarter a year ago.
Analysts had expected the company to report a loss of 9 cents. Sales for the quarter were $217.8 million, compared with $215.5 million a year ago. Earlier this year, Sybase laid off 600 employees.
* Internet search and software company Inktomi Inc. posted a slightly smaller-than-expected loss in its first earnings report since its stunning Wall Street debut last month. Inktomi reported a net loss of $4.7 million, or 24 cents per share, for its fiscal third quarter ended June 30, versus a loss of $2.1 million, or 17 cents, a year ago. Wall Street analysts had expected a loss of 26 cents. Revenue more than quadrupled to $6.3 million from $1.5 million.
* Novellus Systems Inc.’s second-quarter earnings met expectations, one of the few semiconductor equipment makers to match analyst forecasts amid a slump in the chip industry. The company had net income of $16.1 million, or 46 cents a diluted share, on revenue of $142.8 million. Analysts were expecting 45 cents a diluted share. The results aren’t comparable to a year ago because the company didn’t provide pro forma numbers to account for its acquisition of Varian Associates Inc.’s thin-film systems unit.
* Computer chip maker Cirrus Logic Inc. reported a drop in earnings amid a product transition within the company’s storage business and a shift away from its PC motherboard business. Cirrus posted net income of $516,000, or 1 cent per share on a diluted basis, in the quarter ended June 27, sharply below the year-ago period’s $2.5 million, or 4 cents. The figure was slightly stronger than Wall Street analysts’ consensus estimate of zero earnings per share.
* MORE EARNINGS: D3
