Microsoft reports record-high earnings for recent quarter

Thu Apr 26, 6:23 PM ET

SAN FRANCISCO (AFP) - Microsoft Corp. reported on Thursday that its profits soared to a record high in the first three months of the year due to sales of its new Vista operating system and Office software. Profit in the quarter ending March 31 was 4.43 billion dollars, or 50 cents per share, as compared to 29 cents per share, or 2.98 billion dollars, in the same period in 2006.

The    Redmond,    Washington-
based software colossus credited the success of its globally-promoted new Vista operating system and related software for what it declared a record-breaking quarter. Revenues at the world's largest software company tallied 14.4 billion dollars in the quarter as compared to 10.9 billion during the same three months last year. US sales of computers carrying Microsoft's new operating system Vista leapt 67 percent in the week after it was launched on January   30,   defying   the   expec-

tations of analysts who gave Vista lackluster reviews.

Adding to the achievement was the fact that computer sales are usually sluggish in late January and early February. Microsoft spent five years and six billion dollars creating Vista as the successor to its Windows XP operating system. The software powerhouse has touted Vista worldwide as its most secure and thoroughly-tested operating system release. The release was repeatedly delayed, prompting computer pricing deals and discounts to appeal to customers in the notoriously slow sales period following the year-end holiday shopping season. Critics maintain that Vista's complexity forces aspiring users to upgrade computers to meet memory and graphics demands. Approximately 95 percent of the 900 million computers in the world run on Windows operating systems.

Microsoft 3Q profit jumps 65 percent

By JESSICA MINTZ, AP Business Writer

Thu Apr 26, 9:01 PM ET

SEATTLE - Microsoft Corp.'s fiscal third-quarter profit jumped 65 percent, buoyed by sales of its new versions of Windows and Office and by upgrade coupons for the operating system issued over the holidays. Earnings for the quarter ended March 31 rose to $4.93 billion, or 50 cents per share, from $2.98 billion, or 29 cents per share in same period last year.

Results included legal charges amounting to 1 cent per share, but tax benefits boosted profit by 2 cents per share.

Analysts surveyed by Thomson Financial forecast a profit of 46 cents per share. Revenue for the quarter rose 32 percent to $14.4 billion. Wall Street was looking for $13.89 billion in sales.

Microsoft started selling its newest operating system, Windows Vista, to consumers at the end of January. Its "client" division, responsible for Windows, brought in $5.27 billion in sales, 67 percent higher than a year ago. Microsoft said   it   deferred   $  1.2   billion  in

Windows Vista revenue to the third quarter, to account for upgrade coupons given to PC buyers during the holiday season before the consumer launch of the new operating system. Excluding this figure, client revenue totaled $4.1 billion, 30 percent higher than last year.

"Monetization of search is increasing with our new adCenter platform," said the CFO. "It's still a small base, but it's growing very well.

"Microsoft also said it repurchased more than $6.7 billion in stock during the quarter. For the fiscal fourth quarter, which ends June 30, Microsoft said it will earn 37 cents to 39 cents per share, with revenue of $13.1 billion to $13.4 billion. Wall Street currently expects a profit of 40 cents per share on $13.31 billion in sales. For the full 2007 fiscal year, the company raised its guidance, forecasting a profit of $1.48 to $1.50 per share on sales from $50.9 billion to $51.2 billion.