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Wednesday October 18 5:58 PM ET
Microsoft Profits Beat Expectations
By MICHAEL J. MARTINEZ, AP Business Writer
SEATTLE (AP) - First-quarter net income at Microsoft Corp. rose 7 percent, though the bulk of the software giant's profit increase came from the company's investments, not its products.
For the three months ended Sept. 30, Microsoft earned $2.21 billion, or 40 cents per share, up from $2.19 billion, or 40 cents per share, in the year-ago period.
The net results include an accounting charge of 6 cents per share; excluding the charge, Microsoft's operating profits rose 18 percent to $2.58 billion, or 46 cents per share.
However, the most of the company's profit increase came from a $557 million gain on the company's investment portfolio, and not from actual operations. Profits from operations actually fell by $12 million in the quarter.
``Obviously they've invested well, but it's trouble for any company when you're not making your money from your own operations,'' said Kurt Schlegel, an industry analyst with the New York-based META Group.
The results still surpassed expectations of Wall Street analysts surveyed by First Call/Thomson Financial, who were predicting 41 cents per share.
The earnings announcement was made after the close of trading Wednesday. Microsoft shares closed up $1.31 to $51.75 on the Nasdaq Stock Market, but was up to $54.67 after-hours trading.
Revenue rose to $5.80 billion from $5.38 billion in the year-ago period.
Microsoft chief financial officer John Connors, who has defended the company's investment income in the past, noted that Microsoft nevertheless beat Wall Street estimates for its operating profits, despite the lackluster performance.
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