Buoyed by continued strong worldwide sales of personal computers, the Microsoft Corp on Thursday reported strong growth in profits and sales even as it faces the challenges of being a mature technology company.
Microsoft, the world's largest maker of software, reported first-quarter sales of US$9.19 billion, an increase of 12 percent over the period a year ago. Wall Street analysts had projected that sales would be US$8.9 billion.
For the quarter, which ended Sept. 30, Microsoft reported profits of US$2.9 billion, or US$0.27 a share on a pro forma basis. A year ago, profits were US$2.61 billion.
The earnings figure includes costs associated with compensating employees with company stock. Excluding that figure, profits were US$0.32 a share, compared with Wall Street projections of US$0.30 a share for the quarter.
Microsoft executives said the company increased sales across its three main businesses: operating system software for personal computers; software for powerful computer servers; and productivity software, including Microsoft Office.
Wall Street analysts characterized the quarter as solid, and even strong.
"It's another quarter of impressive performance," said Eric Upin, an analyst with Wells Fargo Securities. "It remains a hard-driving, hard-charging culture."
Analysts said that one reason for the tepid reaction among investors was that fewer Microsoft customers than expected renewed their software subscriptions.
One result was that Microsoft reported that its deferred revenue, or money that is booked from subscription sales, dropped US$395 million in the quarter.
More generally, the company said it had a 10 percent increase in sales of operating systems for personal computers, which it attributed to a similar rise in the number of personal computers sales worldwide over the period a year earlier.
That figure was higher than the 6 percent to 8 percent increase that Microsoft projected. But it was lower than the 13 percent that computer sales rose in the first quarter of last year compared with the period in 2002.
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