Microsoft, Sun, IBM report earnings

Microsoft, Sun, IBM report earnings


The tech sector economic doldrums are apparently sparing Microsoft, which reported revenue of $US7.75 billion for the first quarter of its 2003 fiscal year, up 26 per cent from the same quarter a year ago, when revenue was $US6.13 billion.

In its announcement, Microsoft said operating income for the quarter to September 30 totalled $US4.05 billion, compared with $US2.9 billion for the same period last year.

"Results for the first quarter were exceptionally strong, exceeding our expectations," John Connors, Microsoft's chief financial officer, said in a statement. "During the quarter, we saw broader customer adoption of our licensing programs than we anticipated, as customers recognised the value of entering into long-term licensing agreements for our products."

Sales of the Windows XP operating system drove client revenue growth of 33 per cent, with the business version of Windows accounting for 63 per cent of all of the company's operating system sales.

For the full fiscal year, to June 30, 2003, the company said it expects revenue between $US32.2 billion and $US32.6 billion, with operating income between $US14.1 billion and $US14.4 billion.


Sun has reported a net loss of $US111 million for its first quarter, to September 29. That compares with a net loss of $US180 million for the same period last year.

Revenue for the first quarter was $US2.7 billion, down 4 per cent from the $US2.9 billion posted for the first quarter of 2002.

Sun said that in an effort to return to profitability, it plans to reduce its workforce of 39,000 by 11 per cent and consolidate and eliminate excess space.

"We are doing our best to manage the company responsibly for our long-term shareholders," said Scott McNealy, Sun's chairman, president and CEO. "Tough times require tough decisions, and everyone at Sun is dedicated to returning the company to profitability as soon as possible."


IBM's net income fell and revenue stayed flat in its third quarter, during which it shed money-losing divisions, trimmed staff and took advantage of the weak economy to buy companies including PwC Consulting.

IBM's net income for the quarter was $US1.3 billion, down from its $US1.6 billion net income in last year's third quarter. Its total revenue for the quarter was $US20.3 billion, down 1 per cent from a year ago.

This quarter was "one of the toughest operating and spending environments we have ever seen", IBM chief financial officer John Joyce said.

IBM Global Services, the company's most profitable division, posted 2 per cent revenue growth, to $US8.9 billion, in the third quarter, to September 30. On October 1, IBM completed its $US3.5 billion purchase of PwC Consulting, which brings 30,000 new employees into IBM's newly created Business Consulting Services group. IBM's Global Services unit has been particularly hard hit by layoffs this year. In an August regulatory filing, IBM disclosed that it had cut more than 15,000 employees this year, the vast majority of them in its Global Services unit.

Software revenue dropped 3 per cent year-on-year, to $US3.1 billion. Revenue from IBM's DB2 database software grew 2 per cent and revenue from its WebSphere portfolio grew 27 per cent; declining revenue from its Tivoli and Lotus units, and from operating system software, dragged down the software group's performance, IBM said.

Lotus revenue dropped 15 per cent, while Tivoli revenue dropped 16 per cent, Joyce said, citing slowing new licence sales in a "mature" market.

Hardware revenue from continuing operations extended its downward trend, dropping 1 per cent to $US6.8 billion. PC revenue continued dropping but at a slower pace, while the iSeries server line had a "difficult" quarter, dropping 20 per cent from last year's third quarter, IBM said. Year-on-year revenue from storage and the eServers line, the pSeries Unix servers line and the xSeries Intel servers line grew, the company said.

IBM recently sold its hard disk drive business to Hitachi for $US2 billion.

Internationally, IBM's revenue from the Americas is stabilising, coming in with flat growth this quarter after year-on-year declines in the first two quarters. Revenue from the Asia-Pacific region grew 2 per cent after year-on-year declines in the first two quarters, while revenue from Europe continued to drop, down 8 per cent from the year before.

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