Microsoft’s soaring profit tops expectations

Published 9:03 pm Thursday, January 24, 2008

SEATTLE — Microsoft Corp. said its fiscal second-quarter profit topped analysts’ expectations and climbed 79 percent, buoyed by rising sales of Windows-based personal computers.

For the quarter ended Dec. 31, profit increased to $4.71 billion, or 50 cents per share, from $2.63 billion, or 26 cents per share in the same period last year.

Revenue rose 31 percent to $16.37 billion from $12.5 billion in the year-ago quarter, ahead of analysts’ prediction of $15.95 billion in sales, the software giant reported Thursday.

The quarter was particularly strong when compared with a year ago, when the software maker deferred more than $1 billion in revenue because of delays in getting Windows Vista, its newest operating system, to consumers.

Microsoft’s “client” division, responsible for Vista, posted revenue of $4.34 billion. The company said it has sold 100 million copies of Vista since its January 2007 launch.

The business division, which includes Office, brought in $4.81 billion in sales.

Better-than-expected PC sales in the second quarter — up 13.1 percent compared with last year, according to research group Gartner Inc. — helped both divisions.

Sales from the division responsible for the Xbox 360 game console and the Zune digital media player edged up just 3 percent to $3.06 billion. But the division swung to a profit of $357 million from a loss of $302 million last year.

Revenue from Microsoft’s online business, comprised mainly of online advertising sales, rose 38 percent, but the division widened its loss in the quarter to $245 million, from $118 million a year ago.

Microsoft’s guidance for the coming year matched Wall Street’s view. For the fiscal third quarter, which ends March 31, Microsoft said it expects to earn 43 to 45 cents per share on $14.3 to $14.6 billion in revenue. For the full year, it forecasts a profit of $1.85 to $1.88 per share and sales of $59.9 to $60.5 billion.

Wall Street expects Microsoft to post a profit of 44 cents per share on $14.43 billion in revenue for the quarter, and earnings of $1.81 per share on sales of $59.34 billion for the year.