UPDATE 1-Microsoft Q3 at low end of estimates; shares fall
April 18, 2002 4:57:00 PM ET
(Updates with details, background)
SEATTLE, April 18 (Reuters) - Microsoft Corp. (MSFT) on Thursday reported a quarterly net profit that was up 12 percent from a year earlier, but weaker-than-expected sales and a cautious outlook left investors scurrying for cover in after-hours trading.
Shares in Microsoft fell about $4.00 to $52.62, in after-hours trade following the earnings release.
The modest performance of the software giant's core businesses during its fiscal third quarter was supplemented by the $847 million sale of its Expedia online travel unit.
For the quarter ended March 31, Microsoft said its net profit came at the low end of estimates at $2.74 billion, or 49 cents a share, from $2.45 billion, or 44 cents a share, a year earlier.
The net profit included $847 million, or 15 cents a share, from the sale of Microsoft's online travel subsidiary Expedia Inc. (EXPE) to media giant USA Networks Inc. <USAI.O
The company also took a charge for investment impairments that knocked $806 million, or 14 cents per share, off the bottom line.
The Redmond, Washington-based company had been expected to show net earnings of between 49 cents and 52 cents per share, with an average estimate of 51 cents a share, according to analysts polled by Wall Street tracking firm Thomson Financial/First Call.
Analysts had expected the Expedia sale to add 10 cents per share, and had not factored in the investments charge.
Microsoft's revenue was $7.25 billion, below expectations of about $7.34 billion, but 13 percent higher than the $6.4 billion a year earlier.
Operating income was $3.3 billion, better than $2.9 billion in had forecast.
Shares in Microsoft dipped about 0.5 percent in regular trading on the Nasdaq, where it had closed at $56.37.
CAUTIOUS GUIDANCE
Microsoft also issued cautious guidance for its current, fourth fiscal quarter, saying while the PC market looked better than expected, corporate technology spending would likely be weak.
"While we look forward to slightly improved PC growth rates for the next quarter, our expectations for enterprise IT spending levels continue to be quite modest," Chief Financial Officer John Connors said in a statement.
Microsoft said that for its fourth quarter it expects earnings of 41 cents or 42 cents per share on revenue of between $7.0 billion and $7.1 billion.
For its next fiscal year, Microsoft said it expected to make between $1.89 and $1.92 per share on sales of $31.5 billion to $32.4 billion.
Analysts had expected Microsoft to earn between 41 and 47 cents a share for the fourth quarter, with a consensus estimate of 44 cents, up slightly from the 43 cents a year earlier, according to First Call.
Fourth-quarter revenue had been expected to be around $7.65 billion.
Microsoft said sales of desktop applications, the company's largest segment that includes its popular Office set of productivity programs, rose slightly to $2.44 billion in the quarter from $2.41 billion a year earlier.
Sales of desktop platforms, the segment representing its flagship Windows operating system, rose more than 11 percent to $2.29 billion from $2.05 billion on strong shipments of the latest version of the platform, Windows XP.
Microsoft's consumer businesses, which include its MSN Internet unit and Xbox video game console, saw revenue soar to $1.07 billion from $460 million a year earlier, boosted by sales of the game console, which debuted last November. REUTERS
© 2002 Reuters |
