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Microsoft revenues up slightly for first quarter

Microsoft revenues up slightly for first quarter

Microsoft revenues were up slightly for its first quarter, driven by demand for the Windows OS and SQL Server and growth in PC and server shipments.

Microsoft revenues were up slightly for its first quarter ended Sept. 30, driven by demand for core platform software such as the Windows OS and SQL Server, as well as growth in PC and server shipments, the company said Thursday.

Microsoft posted revenue of US$9.74 billion for its third quarter, up 6 percent from the year-ago quarter, when Microsoft reported revenue of US$9.19 billion. Thomson First Call analysts predicted the company would report revenues of US$9.78 billion. Operating income, which was US$4.05 billion, experienced 16 percent growth over the first quarter of last year, when Microsoft reported operating income of US$3.49 billion.

Net income, including a US$361 million, or US$0.02 per share, charge for Microsoft's settlement with RealNetworks Inc. earlier this month, was US$3.12 billion for the quarter, or US$0.29 per share, according to Microsoft. Excluding the charge, Microsoft earned $0.31 cents per share, a penny more than Thomson First Call estimates, which predicted Microsoft would earn US$0.30 per share. Microsoft took a $0.03 per share charge for a settlement with Novell in the same period last year that affected its net income and earnings per share, which were US$2.53 billion and $0.23 per share, respectively.

Analysts had worried that Microsoft's upcoming launch of SQL Server 2005 and Visual Studio 2005 on Nov. 7 may have caused buyers to defer spending decisions in its September quarter and affect revenue negatively, but that wasn't the case, according to a report by financial analyst firm UBS.

Looking ahead to the second quarter, Microsoft is predicting revenue in the range of US$11.9 billion to US$12 billion, operating income in the range of US$4.6 billion to US$4.7 billion, and diluted earnings per share to be US$0.32 or US$0.33.

In addition to the Visual Studio and SQL Server launches, Microsoft also is scheduled to ship its highly anticipated Xbox 360 product in the quarter on Nov. 22. Analysts are concerned that the product may not bring in the revenue Microsoft is expecting because they foresee problems with suppliers getting the product to market in volumes that will meet with customer demand. UBS recently lowered its shipment forecast for Xbox 360 due to these concerns.

Xbox 360 also is Microsoft first-ever product launch in the U.S., Europe and Japan in the same quarter, which could prove challenging, UBS analysts said. Analysts expect Microsoft to provide an update on Xbox 360 during its earnings call Thursday afternoon.


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