REDMOND, Wash. (Dow Jones)Microsoft Corp.'s (MSFT) net income fell 13% in its fiscal second quarter, weighed down by charges related to its proposed antitrust settlement, and the software giant again trimmed its fiscal 2002 earnings target.
However, second quarter revenue jumped 18%, boosted by the introduction of Microsoft's Windows XP operating system, Xbox video game console and the latest version of its MSN Internet service.
For the quarter ended Dec. 31, the software giant late Thursday posted net income of $2.28 billion, or 41 cents a share, compared with $2.62 billion, or 47 cents a share, a year earlier.
The latest quarter included a charge of $660 million, or eight cents a share, for estimated expenses related to the proposed settlement of class action lawsuits pending against Microsoft.
In October, the company projected second quarter earnings of 49 cents to 50 cents a share on revenue of $7.1 billion to $7.3 billion. At the time, analysts had been expecting earnings of 51 cents a share; their most recent estimate was for earnings of 43 cents a share, according to a Thomson Financial/First Call survey.
Revenue climbed to $7.74 billion from $6.55 billion. Windows XP, Xbox and MSN Version 7 "are off to terrific starts," Chief Financial Officer John Connors said in a prepared statement.
"Additionally, our continued focus on cost control and efficiency really paid off in terms of our operating results," Connors added.
Microsoft said more than 17 million copies of XP have been sold on new personal computers and by retailers since the operating system's Oct. 25 launch, "making it the most successful Windows launch ever."
Meanwhile, the company has sold 1.5 million Xbox consoles in North America and saw "strong growth this quarter on the strength of the Oct. 25 launch of MSN 7." Microsoft now has more than eight million Internet service subscribers.
Not all company sentiments were positive. "While we are pleased with our results this quarter, we are concerned about the health of the global economy and have yet to see a recovery in many of the world's largest markets," Connors said in Microsoft's statement.
Still, Microsoft is forecasting fiscal third quarter earnings above analysts' expectations. The company now expects earnings of 50 cents to 51 cents a share for the period ending March 31, on revenue of $7.3 billion to $7.4 billion. Analysts are anticipating third quarter earnings of 47 cents a share on sales of $7.49 billion.
For all of fiscal 2002, which ends June 30, Microsoft is predicting earnings of $1.57 to $1.60 a share, slightly below the $1.61 to $1.66 a share it projected in October. The company also expects full year revenue of $28.4 billion to $29.1 billion, compared with its October forecast of $28.8 billion to $29.1 billion.
Microsoft's October forecast was down from initial fiscal 2000 estimates for earnings of between $1.91 and $1.95 a share, and was mainly because of items such as investment write downs.
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