Microsoft Beats Forecasts With 22% Earnings Growth

Net income for the quarter was $614 million, or 95 cents a share, against $499 million, or 78 cents. Wall Street analysts had been projecting earnings of about 90 cents a share.

The advance was struck on revenues up almost 14 per cent at $2.29 billion, against $2.02 billion in the same period last year. This was the slowest revenue growth in the companys history, but Microsoft said it was pleased with the outcome, noting that revenues rose over strong results in the first quarter of 1995 when the company launched Windows 95, its widely-used PC operating system.

Last year, Microsofts revenues and earnings grew by nearly 50 per cent, but this rate was not expected to continue in the current year.

 

First-quarter gains were driven by solid results across a wide range of businesses, including operating systems, personal productivity tools and enterprise solutions, the company statement said.

While revenue growth in many categories was relatively slow, entertainment software sales grew rapidly, the company said.

During the quarter Microsoft began shipments of a new version of Windows NT, aimed at business customers.

Initial sales are outstanding, said Jeff Raikes, group vice-president. Corporate customers made the decision to adopt Windows NT servers and workstations in record numbers, driving 19 per cent revenue growth over the last quarter in the US and Canada, he added.

Windows NT shipments were four times the level of the same period last year, the company said. Microsoft said that its new Internet browser, Internet Explorer, had been downloaded by more than 3 million people since the latest version was introduced two months ago.

After the close of the quarter, Microsoft unveiled a new Internet-based version of its on-line information service The Microsoft Network.

Operating systems and other systems software accounted for 52 per cent of revenues, with applications programs at 47 per cent. North American sales accounted for 35 per cent of revenues, versus 37 per cent in the same period last year.

European revenues dropped to 19 per cent of the total, from 21 per cent last year.