Microsoft Says 2003 Profit to Miss Forecasts
Microsoft Corp. said Thursday that fiscal third-quarter profit rose nearly 12% but missed Wall Street’s expectations, and warned that profit in fiscal 2003 won’t meet forecasts. The news caused the biggest software company’s stock to slump in after-hours trading.
Microsoft reported a profit of $2.74 billion, or 49 cents a share, compared with $2.45 billion, or 44 cents a share, a year earlier. Analysts surveyed by Thomson Financial/First Call had predicted 51 cents a share. The results included an $847-million after-tax gain, or 15 cents a share, on the sale of its online travel service Expedia. Revenue rose 15% to $7.25 billion.
For fiscal 2003, which begins July 1, the company said earnings per share will be lower than the Thomson Financial/First Call estimate of $1.87 a share on revenue of $28.9 billion.
Microsoft’s senior executives have decided to spend heavily--$800 million--next year on research and development and long-term projects, including the Xbox game system and MSN Internet service. Microsoft, which lost 26 cents to $56.37 in the regular session on Nasdaq, fell to $54.89 in after-hours trading.
In other technology earnings news Thursday:
* EBay Inc. said first-quarter earnings more than doubled on sharply higher sales, but its shares fell on concerns that the strong growth rate of the company’s popular online auction site may be slowing. The San Jose-based online auctioneer, which has steadily expanded into new product categories from high-end art to real estate, reported a first-quarter profit of $47.6 million, or 17 cents a share, compared with $21.1 million, or 8 cents a share, a year ago.
On an operating basis, excluding unusual costs, the company said it earned 18 cents a share in the quarter. Most analysts had been forecasting operating earnings of 16 cents a share. EBay’s revenue grew to $245.1 million from $154.1million. The company said it remains confident that second-quarter and full-year earnings will surpass or come in at the high end of its previous guidance. EBay shares, which fell 3.4%, or $1.89, to $53.04 a share in regular Nasdaq trading, fell to about $50.50 in after-hours trading. The company said revenue from third-party advertisers represented about 8% of total revenue, down from 13% in the fourth quarter of last year.
* Gateway Inc. reported a loss and shrinking revenue in the first quarter as the Poway, Calif., maker of personal computers retrenched against a backdrop of weak demand and stiff competition. Gateway lost $123 million, or 39 cents a share, compared with a loss of $502.9 million, or $1.56 a share, a year earlier, as the company began a restructuring that eventually included closing foreign operations and downsizing in the United States. The results were in line with analysts’ expectations.
Sales at the company, which has responded with price breaks and package deals to market leader Dell Computer Corp.’s rising interest in the home computer market, were $992 million after $2.03 billion a year ago. Gateway sold 645,000 units in the U.S., down 30% from a year ago, and down 5% from the fourth quarter of last year. The company maintained its full-year loss guidance of a range of $200million to $250million, or 39 cents to 49 cents a share. It expects revenue to be in the range of $4.5billion to $5billion. Gateway shares fell 9 cents to $6.20 on the New York Stock Exchange.
* Compaq Computer Corp., which soon could become part of rival Hewlett-Packard Co., reported a first-quarter profit of $44million, or 3 cents a share, contrasted with a loss of $131 million, or 8 cents a share, in the first quarter of 2001. The results were slightly higher than analysts’ expectations. The year-ago results were adjusted to reflect a $222-million charge required by a change in accounting standards. Revenue fell 16% to $7.7 billion. Compaq shares gained 14 cents, or 1.3%, to close at $10.82 on the NYSE.
* Sun Microsystems Inc. posted a slim fiscal third-quarter loss of $26 million, or 1 cent a share, that beat Wall Street expectations by a penny. The Palo Alto network equipment maker earned $136 million, or 4 cents a share, a year earlier. Sun, facing slumping demand for high-powered network servers and workstations, said sales fell 24% from a year earlier, to $3.1 billion. Sun shares rose 29 cents to $8.52 on Nasdaq.
* EMC Corp., the largest maker of computer storage products, posted its third consecutive quarterly loss, of $76.9 million, or 3 cents a share. In the year-ago first quarter, the Massachusetts company posted a profit of $398.8 million, or 18 cents a share. Sales fell 44% to $1.30 billion. EMC closed up 60 cents to $11 on the NYSE.
* Emulex Corp., a Costa Mesa supplier of computer storage networking products, reported a net loss of $16.5 million, or 20 cents a share, for its fiscal third quarter, compared with a net loss of $24.5million, or 32 cents a share, for the same period a year ago. Revenue for the three months ended March 31 grew 15% to $69.6million. Emulex shares rose $1.01 to $29.91 on Nasdaq.
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Associated Press, Reuters and Bloomberg News were used in compiling this report.
