Microsoft results in line with lowered expectations

Microsoft results in line with lowered expectations

Microsoft Friday reported financial results for its fiscal second quarter that were in line with a reduced-expectations warning issued last month, and the software vendor said it remains "guarded" about how the short-term economic outlook will impact PC demand and technology spending in general.

Microsoft's net income totalled $US2.62 billion in the quarter ended December 31, while revenue reached a record level of $6.59 billion due to what was described as "strong customer demand" for Windows 2000 and the company's server-level software products. But the results were similar to the projections that Microsoft made as part of last month's warning, when it said fourth-quarter revenue could be as much as 6 per cent below plan.

At that time, Microsoft also reduced its outlook for the rest of the current fiscal year, saying that revenue for the year as a whole would likely total about $25.2 billion -- 5 per cent lower than previous expectations. The company stuck with that estimate in Friday's announcement and said revenue in its fiscal third quarter should come in between $6.3 billion and $6.4 billion.

"While we are enthusiastic about the breakthrough products and services the company will be delivering in 2001, we remain guarded about the near-term economic outlook and its impact on PC demand and technology spending," said John Connors, Microsoft's chief financial officer, in a statement.

Microsoft is one of many technology vendors that were hit by lower-than-expected sales in the just-finished quarter. For example, Apple Computer last week reported a $195 million quarterly loss on revenue that was $600 million below its original expectations. And vendors such as Hewlett-Packard and Dayton have warned that their financial results will be below plan due to slowdowns in sales to corporate users.

Microsoft's mid-December warning about the second quarter was followed by an internal memo from CEO Steve Ballmer that detailed strategic plans and new "efforts to eliminate unnecessary expenses". Ballmer told Microsoft employees that he expected them "to reduce planned expenditures very significantly, both in the short term and the long term."

Sun Microsystems also announced its fiscal second-quarter results late Friday, saying net income rose 56 per cent from the same period a year ago to $552 million. Revenue for the quarter ended December 31 totalled $5.1 billion, up 44 per cent from the previous year.

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