Microsoft's net income doubles

forecast raised

Sign-ups for licensing plan noted in quarterly report

October 18, 2002|By BLOOMBERG NEWS

REDMOND, Wash. - Microsoft Corp., which has posted sales growth each quarter since 1986, said its first-quarter net income more than doubled as revenue rose because of a new licensing plan. The company raised forecasts for the year, sending shares up 6.4 percent.

Net income rose to $2.73 billion, or 50 cents a share, from $1.28 billion, or 23 cents, a year earlier, Microsoft said. Sales in the quarter that ended Sept. 30 climbed 26 percent, to $7.75 billion, from $6.13 billion a year ago.

The world's biggest software maker benefited from customers who signed up for a new licensing program by a July 31 deadline, analysts said. The plan, which locks customers into multiyear agreements, fed a 33 percent jump in sales of the Windows operating system for personal computers, even though PC sales stalled.

"It was a blowout," said Scott McAdams, chief executive of McAdams Wright Ragen, which manages about $1.7 billion and owns shares of Microsoft.

During the regular trading session, before the earnings report was released, Microsoft shares rose 36 cents to $50.77 on the Nasdaq stock market. Shares climbed past $53 in after-hours trading. They had declined 23 percent this year.

Microsoft said it will earn $1.89 to $1.95 a share on sales of $32.2 billion to $32.6 billion in the fiscal year that ended June 30. That compares with its previous forecast for earnings of $1.85 to $1.91 on sales of $31.4 billion to $32 billion.

For the current quarter, which will end in December, Microsoft said it will earn 45 cents to 46 cents a share on sales of $8.5 billion to $8.6 billion. Analysts expected an average of 50 cents a share on sales of $8.39 billion.

Microsoft Chief Financial Officer John Connors said some sales the company had expected to close in the current quarter were completed last quarter. He also said PC sales "won't see much growth in the December quarter" and that consumer spending on software and computers during the holiday season will be weak.

He said he expects personal computer sales to grow between 1 percent and 5 percent for Microsoft's current fiscal year, echoing the forecast he gave in July.

Net income for last quarter included a 5-cent charge related to investment losses.

Analysts had expected profit of 43 cents a share on sales of $7.15 billion in the quarter.

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