The ``The PC market has been on fire.' according to this Bloomberg article by way of the Microsoft thread.
I didn't know PC sales could be characterized as quite that. What's going to happen when the "Y2K fear was a joke" buying, and then W2K upgrade buying, kick in. No wonder Intel budgeted $5 billion for cap ex this year. I guess that reports of the PC's death, like Mark Twain's at the time, were greatly exaggerated.
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Redmond, Washington, Jan. 14 (Bloomberg) -- Microsoft Corp.,
the world's largest software maker, will report higher fiscal
second-quarter earnings on Tuesday as sales of personal computers
boosted demand for its software, analysts said.
Microsoft is expected to report that its earnings for the
period ended Dec. 31 rose to 42 cents a share from a split-
adjusted 36 cents a year ago, according to analysts polled by
First Call/Thomson Financial. Revenue rose to $6.2 billion from
$5.2 billion, analysts forecast. The company has beaten earnings
forecasts for the past eight quarters, and unofficial ``whisper'
estimates run as high as 47 cents a share.
Microsoft benefited from strong sales of personal computers
during the holiday season, boosting sales of its Windows operating
system and application programs such as its Office products,
analysts said. Microsoft's Windows software runs on more than 90
percent of PCs sold in the U.S. today.
``It's been a good quarter,' said Michael Kwatinetz, a
Credit Suisse First Boston Inc. analyst with a ``strong buy'
rating on Microsoft. ``The PC market has been on fire.'
Microsoft shares today rose 4 7/16, or 4.1 percent, to 112
1/4 in trading of almost 36.7 million shares, making it the fifth-
most active U.S. stock.
Microsoft's earnings are expected to continue to grow this
quarter and for the rest of the year, analysts said, as the
company ships its long-awaited Windows 2000 operating system. The
company's most ambitious product upgrade, the new software for
businesses will go on sale Feb. 17.
Changes at Top
Microsoft's earnings report will come less than a week after
the company announced that co-founder and Chief Executive Bill
Gates, the man who came to epitomize both Microsoft's growth and
the overall rise of the software industry, will step down from day-
to-day management of the company to focus on the development of
new technology.
Microsoft President Steve Ballmer was named chief executive.
Gates will remain chairman and take on a new title of chief
software architect, saying he wants to help guide the company's
next generation of Internet-based software.
The announcement had little effect on the company's stock.
Ballmer was named president in a management reorganization in July
1998, and he's effectively been leading most day-to-day management
of the company since then, analysts said.
``We see no operational impact on Microsoft as a result of
this management change,' Merrill Lynch & Co. analyst Chris
Shilakes, who has a ``near-term accumulate' rating on Microsoft,
wrote to clients today. ``Ballmer has been heavily involved in
daily Microsoft operations for years, and Gates' recent focus has
been in reshaping Microsoft to address the Internet opportunity.'
Windows, Office
Microsoft benefited last quarter from strong holiday sales of
its Windows operating system, its best-selling software and a
product that accounts for about 40 percent of Microsoft's
quarterly revenue. The company is expected to report that it
generated about $2.6 billion from sales of its Windows products,
analysts estimated.
The fourth quarter is generally one of the best for personal
computer hardware and software makers, as consumers increase their
purchases during the holidays and companies boost spending at year-
end. Windows is sold primarily through computer makers such as
International Business Machines Corp., Dell Computer Corp. and
Gateway Corp., preloaded on computers that are then sold directly
to consumers or through retail stores.
Microsoft's Chief Financial Officer last quarter, Greg
Maffei, said in October that the company's earnings would be
3 cents a share above estimates at the time because of strong
holiday and year-end corporate spending. Maffei last month
resigned to head a Canadian telecommunications company.
Microsoft also is expected to benefit from sales of its
Office package of software applications, which include word
processing and spreadsheet programs.
``The strongest areas are the Office products,' Kwatinetz
said. ``This will be a very strong quarter for Office.'
Antitrust Case
Investors are largely ignoring for now the threat to
Microsoft from the antitrust suit filed against the software giant
in 1998 by the U.S. Department of Justice and 19 states.
Microsoft shares languished for much of last November
following a ruling by the judge in the case that found that
Microsoft had a monopoly in the personal computer operating system
business, and that it used the monopoly to gain a competitive
advantage in other markets, in the process harming consumers and
competitors.
That ruling by U.S. District Judge Thomas Penfield Jackson,
an initial finding that supported much of the government's case,
set the stage for settlement negotiations that are continuing.
Even after reports this week that government antitrust
enforcers will seek to break up Microsoft into competing
companies, analysts and Microsoft executives said the company will
not settle the case on terms harmful to investors. That could
leave the case in the appeals courts for several years.
``I think it'd be absolutely reckless and irresponsible for
anyone to try and break up this company,' Ballmer said yesterday.
``I think it'd be the single biggest disservice anyone could do to
consumers in this country.'
That apparent impasse has led investors to discount the
threat of the case, at least for now.
Microsoft shares have risen more than 22 percent since Judge
Jackson's ruling, surpassing the 7 percent gain in the Standard &
Poor's 500-stock index during the same period.
¸2000 Bloomberg L.P.
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