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Microsoft says profit rose 35% in latest quarter

Microsoft Corp. reported fiscal third-quarter revenue that missed analysts’ most optimistic predictions, a sign that corporate customers may be putting off computer purchases.

Sales rose 6.3% to $14.5 billion, compared with analysts’ estimates that were as high as $14.8 billion for the quarter that ended March 31.

While Microsoft’s Windows business has benefited from increased consumer purchases of personal computers, corporations have hung back, avoiding spending on new machines and contracts with the Redmond, Washington-based software maker. Customers may also be refraining from deals that stretch over multiple years.

“Investors have been looking for reasons to sell stocks, even when the results are good,” said Todd Lowenstein, a fund manager for Highmark Capital Management “They needed to deliver near-perfect execution.”

Microsoft fell $1.40, or 4.5%, to $29.99 in extended trading after the report. The shares had risen 6 cents to $31.39 at the close of regular trading. The stock fell 3.9% last quarter, while the Standard and Poor’s 500 Index rose 4.9%.

Third-quarter net income rose 35% to $4.01 billion, or 45 cents a share. Unearned revenue, a measure of multi-year contracts, was $12.3 billion, compared with $12.8 billion anticipated by some analysts.

Microsoft said operating expenses for the year ending June 30 will be $26.1 billion to $26.3 billion, compared with a January prediction of $26.2 billion to $26.5 billion. Microsoft no longer provides forecasts for sales and profit.

A year earlier, net income was $2.98 billion, or 33 cents a share, on sales of $13.6 billion. Net income in that period included severance costs and impairments to investments.

In the second quarter, Microsoft beat analysts’ estimates for profit by 15 cents a year. Yet the company raised investors’ concerns by saying that gains were fueled by consumer demand as business demand remained sluggish. Shares fell the day after the report.

Technology bellwethers reporting earnings in recent weeks have given a mixed picture of the rebound in technology spending. Intel Corp., the world’s biggest chipmaker, last week indicated that recovery may be gathering steam with a forecast for rising sales this quarter.


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