Microsoft Corp. posted a higher quarterly profit and sales on better-than-expected demand for personal computers as well as strong sales of its server software and Xbox game consoles, the world’s largest software maker said Thursday. (MSNBC is a Microsoft-NBC joint venture.)
Microsoft, based in Redmond, Wash., reported a net profit of $2.56 billion, or 23 cents a share, for its fiscal third quarter ended March 31, compared with $1.32 billion, or 12 cents a share, a year earlier. Revenue rose to $9.6 billion from $9.18 billion.
Although revenue was a little short of expectations, profits were in line with expectations after excluding charges for legal-related issues and stock-based compensation, analysts said. And the company issued projections that were better than Wall Street expected, driving shares slightly higher in extended trading, said Brendan Barnicle, an analyst at Pacific Crest Securities in Portland, Ore.
Microsoft reported unusual legal charges of $768 million, or 5 cents per share, which analysts generally exclude. The charges were related to recent settlements of legal disputes with computer maker Gateway and software developer Burst.com as well as money set aside for potential future settlements.
Last year Microsoft's earnings were depressed by a charge of $2.53 billion or 17 cents a share, related to a settlement of a lawsuit with rival Sun Microsystems and a fine ordered by the European Union.
Microsoft projected fiscal fourth-quarter revenue of $10.1 billion to $10.2 billion, compared with the Wall Street target of $10.1 billion.
In addition, in its first projections for fiscal 2006, which begins July 1, Microsoft said it expects revenue of $43.3 billion to $44.1 billion, compared with analyst projections of about $43.3 billion. Microsoft projected diluted earnings per share of $1.26 to $1.30, in line with the current consensus estimate of $1.27 per share.
“Given our optimism about the future with our strong product pipeline and the growth opportunities from our investments in innovative products and services, we expect increased revenue growth in fiscal 2006,” Scott Di Valerio, corporate vice president and corporate controller at Microsoft, said in a statement.
Revenue in every Microsoft division, except its MSN Internet division, grew in the latest quarter.
Microsoft’s Windows division, which includes its flagship operating system software, posted revenue growth of 2.1 percent to $2.98 billion, while the server and tools division grew 11.6 percent to $2.45 billion.
Sales in the division that includes Office grew 2.5 percent to $2.77 billion. In the Home and Entertainment division, which includes the Xbox business, revenue grew 11.9 percent to $593 million. MSN sales fell 4.6 percent to $564 million.
