Microsoft beats forecast with 62% earnings rise
Tuesday 20 July 1999
The Washington-based software maker warned in the earnings report that its revenue growth rate will drop in its fiscal year 2000, which began 1 July, due to slowing personal computer demand, uncertainty surrounding the year 2000 computer bug and global economic conditions. Microsoft has a history of guiding analysts to take a conservative view in their forecasts. "We will not see further margin expansion," Mr Maffei said.
Microsoft's fourth-quarter profit jumped 62 per cent, beating estimates, on strong sales of its Office 2000 business software. Earnings for the period ended 30 June climbed to $2.2bn, or 40 cents a share, from $1.36bn, or 25 cents a share, a year earlier. The so-called whisper number, or unpublished estimate, was 38 cents a share. Revenue rose to $5.76bn from $4bn a year earlier.
"It looks pretty phenomenal both on the top and bottom line," said Andrew Roskill, an analyst at Warburg Dillon Read. Microsoft made some accounting changes in the quarter that had the effect of increasing revenue by about 1 cent a share, analysts noted.
Separtely last night, IBM, the world's largest computer maker, also reported strong, results after the US markets closed, with a 17 per cent rise in second-quarter profits on sales in its services business and a surge in computer revenue. Profits rose to $1.69bn, or 91 cents a share, from $1.45bn in the previous year. Sales rose 16 per cent to $21.91bn. IBM, which also ranks as the world's largest computer services company, added to its mushrooming services business by signing $9.5bn in contracts to manage other company's computer networks.
IBM shares rose to $136 in after market trade after the report, while shares in Microsoft rose to a new record of $1001/16.
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