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Technology Stocks : Advanced Micro Devices - Moderated (AMD) -- Ignore unavailable to you. Want to Upgrade?

To: Pravin Kamdar who wrote (15048)	10/19/2000 4:14:55 PM
From: Maverick	Read Replies (1) \| Respond to of 275872

Microsoft saw healthy sales in Asia and in the United States, but revenues declined in Europe [This bode well for AMD as it managed to gain mkt shr in Europe in the face of a tough Europe mkt] Posted at 10:41 p.m. PDT Wednesday, October 18, 2000 www0.mercurycenter.com Microsoft's strong sales ease investor worries BY KRISTI HEIM Mercury News Seattle Bureau SEATTLE -- Microsoft Corp. reported first-quarter revenues Wednesday of $5.8 billion, up 8 percent from last year and well ahead of analysts' expectations, calming nervous investors worried about sluggish demand for personal computers. In part due to strong sales at consumer services like the MSN network, the world's largest software maker also racked up an 18 percent increase in profits for the quarter ended Sept. 30, reporting net income of $2.58 billion, or 46 cents a share, before the effects of accounting change, compared with $2.19 billion, or 40 cents a share, a year earlier. Wall Street analysts had expected the company to earn just 41 cents a share, according to First Call/Thomson Financial. Microsoft's chief financial officer, John Connors, credited the company's newest computer operating systems, Windows 2000 Professional and Windows Me, for driving the quarter's surprising performance. He also reported good progress for the company's server products, which compete with those of rivals such as Sun Microsystems and Oracle. Digging more deeply into the performance of the company's basic business, however, Microsoft doesn't look as healthy. The company's total operating costs jumped 14 percent to $3.02 billion even as operating income remained flat at about $2.78 billion. But a 51 percent increase in investment income, from $550 million to $1.13 billion, helped the company post an overall gain in profits. In addition, the future growth of PC sales remains uncertain, and Microsoft has only modest growth prospects for the next few quarters, said Andrew Brosseau, an analyst with SG Cowen Securities Corp. ``They're in middle of a transition,'' Brosseau said. ``PC growth is a hard one for them to answer. . . . It depends on the overall economy, Middle East and a lot of different factors.'' Microsoft's transition toward more Internet-based products and services -- a strategy known as Microsoft.Net -- is showing the first signs of a positive impact on the company's earnings. ``As far as getting critical mass, it appears Windows 2000 and their Internet story is beginning to take off,'' said Melissa Eisenstat, executive director at CIBC World Markets. The software giant reorganized its revenue categories last month to reflect the change in strategy. Sales for desktop applications, such as the Microsoft Office suite of common business applications, dropped slightly to $2.14 billion. Revenue from desktop platforms, which include PC versions of Microsoft's operating systems, increased 13 percent to $1.88 billion this year. And sales of enterprise software and services jumped 9 percent, from $949 million to $1.04 billion. This category includes the Windows NT Server and Windows 2000 Server operating systems, as well as e-business software. Microsoft saw healthy sales in Asia and in the United States, but revenues declined in Europe. ``World economic conditions look less rosy than they did three months ago,'' Connors said. The company is carefully watching conditions in Europe over the next three months to see if the continent's gloomy economic conditions affect technology sales. Microsoft's stock price, which has dropped nearly 57 percent for the year, fell to its lowest level in two years Monday as investors shed tech stocks over concerns about the health of the PC market. In regular trading Wednesday, Microsoft shares rose $1.31 to $51.75. Following release of the earnings report, shares jumped $4.19 to $55.94 in after-hours trading.