Thread---Microsoft Corp.
Dow Jones Newswires -- July 19, 1999
DJ Microsoft CFO -2: Sees Rev Growth Slowing in 2000
By Paula L. Stepankowsky
LONGVIEW, Wash. (Dow Jones)--As expected, Microsoft Corp. (MSFT) reported fiscal fourth-quarter earnings that more than beat Wall Street expectations after the markets closed Monday, although Chief Financial Officer Greg Maffei cautioned in a phone call with analysts that the company expects slowing revenue growth rates in the 2000 fiscal year.
Maffei also said that the company is reviewing a structure for a "tracking" stock for Microsoft's Internet interests but that "we have no immediate plans to announce such a structure." He declined to comment about whether more news would be forthcoming at Microsoft's annual analysts meeting, set for Thursday.
The company reported fourth-quarter earnings of 40 cents a diluted share, four cents more than the official Wall Street estimate of 36 cents and two cents more than the unofficial "whisper number" of 38 cents a share.
Analysts said they were pleased overall with the revenue growth and earnings per-share results for the quarter.
"I was expecting them to be cautious in the next two quarters," said Andrew Roskill of Warburg Dillon Read. "I do think there is room for upside regardless of that guidance, and they generally err on the cautious side."
Richard Sherlund of Goldman Sachs said the quarter was a strong one, even excluding a number of unusual items that benefited revenues but had no net effect on earnings-per-share growth of nearly 60%.
"So while there were a number of unusual items, the quarter was nevertheless a quite robust quarter," Sherlund said.
Maffei said the company expects revenue growth to slow in fiscal 2000 due to declining demand for personal computers, uncertainty surrounding the Year 2000 computer issue and uncertain global economic conditions.
For the fourth quarter, however, the company saw continuing consumer demand for Office 2000, and its server products, including Windows NT Server, SQL Server and Exchange Server. Windows NT Workstation also continued to growth, with worldwide installed base more than doubling since June 1998 to more than 37 million licensed users.
This resulted in fourth quarter net income of $2.20 billion, or 40 cents a diluted share, up 60% from the $1.35 billion, or 25 cents a diluted share, the company reported a year ago. Revenue grew to $5.76 billion, a 30% increase over revenue of $4.15 billion a year ago.
For the year ended June 30, Microsoft earned $7.79 billion, or $1.42 a share, on revenue of $19.75 billion, compared with $4.49 billion, or 84 cents a diluted share, on revenue of $15.26 billion a year ago.
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