Sunday, January 31, 2010

Strong Windows 7 sales boost Microsoft profits

 Software maker Microsoft recorded a bigger-than-expected 60 percent jump in quarterly profit, thanks to strong sales of its latest operating system, Windows 7.

The company also said it expected business technology spending to recover this year.

"We didn't see enterprise spending growth in our fiscal second quarter just ended," Chief Financial Officer Peter Klein said.

"However, our general view is a recovery will occur starting this calendar year and gradually over the next several years," he added.

Microsoft's net profit came to US$6.7 billion, or 74 cents per share, for its fiscal second quarter, versus US$4.2 billion, or 47 cents per share, a year ago.

"Make no mistake, these were very good results out of Microsoft. Expectations were heightened ever the last few weeks, given Q4 PC shipments and good numbers from Intel," said Andy Miedler, analyst at Edward Jones.

The company stopped making specific profit or revenue forecasts in January 2009, citing market volatility. But Windows 7 has proved to be Microsoft's strongest-selling operating system to date after the disappointing Vista. PC sales grew 15.2 percent last quarter.

Microsoft's revenue rose 14 percent to US$19.02 billion, including US$1.71 billion of deferred revenue from the Windows 7 launch in October. Excluding that, sales were US$17.31 billion.

The company's stock has risen 62 percent over the past 12 months, outstripping a 40 percent gain in the Nasdaq.

"Last year the [Microsoft's] stock was a big outperformer. A lot of people think the stock has already had its run," said Jane Snorek, technology analyst at First American Funds. "But I think with PCs doing this well and a new Office coming in June, that the stock can still outperform. I think Office can be a big hit."

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