Microsoft beats Wall Street estimates

Software giant Microsoft Corp. released earnings Thursday for the fiscal third quarter, beating Wall Street estimates by US$0.02. The company reported earnings of US$0.44 per share on revenue of $6.46 billion for the third quarter ended March 31.

Twenty-three analysts polled by First Call/Thomson Financial expected Microsoft to report earnings of $0.42 per share. Microsoft had expected its numbers to come in at $0.42 to $0.43 per share on revenue between $6.3 billion and $6.4 billion, according to guidance the company gave in January.

Microsoft reported a 14 percent increase in revenue from the third quarter a year ago, when it reported earnings of $0.43 per share on revenue of $5.66 billion. Operating income was $3.0 billion [b], up 9.6 percent on the same period a year ago, while net income was 2.8 percent above year-ago levels at $2.5 billion [b].

In a statement Thursday, Microsoft Chief Financial Officer John Connors attributed much of that growth to strong sales of Windows 2000 Professional and growing demand for its .NET Enterprise Server products, used by business customers.

Sales of desktop applications, which include its new Office XP software, came in at $2.41 billion. Revenue from desktop operating systems totaled $2.05 billion, while Microsoft's enterprise software and services division, which includes server software, reported revenue of $1.25 billion.

Microsoft's consumer software, services and devices business unit -- which include MSN Internet service, its network of content sites, WebTV products and servers, games, and its mobile and wireless devices -- reported revenue of $460 million. Revenue from it's online commerce investments, including Expedia Inc., CarPoint.com and HomeAdvisor, came in at $129 million.

The company showed higher losses from its equity investments, including MSNBC, reaching $46 million, compared to $4 million the third quarter a year earlier.

Around the world, the Americas and the South Pacific regions brought in the lion's share of the quarter's revenue, about $2.42 billion. Sales in Europe, the Middle East and Africa totaled $1.2 billion, while Asia accounted for $836 million.

"Despite this quarter's solid performance, we continue to be mindful of the current economic climate and the impact it may have on business and consumer demand," Connors said in the statement.

Microsoft said revenue for the fiscal fourth quarter would fall at least a penny short of what analysts had expected, according to First Call/Thomson Financial. The company said earnings would be in the range of $0.41 to $0.42 on revenue of $6.3 billion to $6.5 billion.

On the New York Stock Exchange, shares of Microsoft (MSFT) gained $2.59, or 3.87 percent to close at $68.02 in heavy trading. Its stock was the fifth-most traded on the exchange with 69.9 million shares changing hands.

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