Market Gems:Stocks w/Strong Earnings and High Tech. Rank Message Board

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Strategies & Market Trends : Market Gems:Stocks w/Strong Earnings and High Tech. Rank

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To: KevinMark who wrote (117884)	12/4/2000 8:31:25 AM
From: Lane Hall-Witt	Read Replies (1) of 120523

KM -- MSFT: I've only taken a quick look at the prior 10-Q, but here are a few facts related to its investment income: (1) In 1Q2001, investment income was $1.127 billion; net pre-tax income was $3.852 billion; net income after taxes but before an accounting change was $2.581 billion; net income after taxes and accounting change (new accounting methodology for derivatives) was $2.206 billion. (2) Investment income included dividends ($97 million), interest ($431 million), and recognized net gains on investments ($599 million). (3) The form of investment income we're interested in is recognized net gains (or losses) on investments. This is income recognized when MSFT sells (or writes off, I assume) investments. This means fluctuations in the paper value of investments would not immediately affect the bottom line. In fact, MSFT could still record investment gains, even in this down market, by selling investments at a profit. (4) MSFT purchases derivatives to hedge against security risk, currency risk, and interest-rate risk.

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