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Sat, Oct 28, 2006 - Page 10 News List

Microsoft reports strong profit for the last quarter


Microsoft Corp said on Thursday first-quarter net profit (for the July-June financial year), operating income and revenue increased 11 percent from a year ago, boosted partly by surging demand for its Xbox 360 game device.

The double-digit results beat market expectations and came at the high end of company forecasts.

"It was a very good start to what we are expecting to be an excellent year," Microsoft chief financial officer Chris Liddell said during a conference call with financial analysts. "We continue to expect full-year double-digit revenue growth in 2007."

Demand for Microsoft server and tools software was "particularly strong" and the company's coffers benefited from the increasing popularity of the Xbox 360 video gaming console and related products, Liddell said.

The Redmond, Washington-based software colossus reported net profit for the first three months of its business year of US$3.48 billion, or US$0.35 per share.

Operating income for the quarter ended Sept. 30 was US$4.47 billion and revenue totaled US$10.81 billion.

Net income for the same period last year was US$3.14 billion, or US$0.29 per share.

Wall Street analysts had forecast Microsoft's quarterly profit would be US$0.31 per share on revenue of US$10.75 billion.

Revenue in the Entertainment and Devices Division soared 70 percent, driven by demand for Xbox 360 consoles, software, peripherals and Xbox Live.

Microsoft has sold 6 million Xbox Live systems since the console was released a year ago and Liddell predicted the number would jump to 10 million by the end of the year-end holiday shopping season.

The company expected Xbox division sales to soar 33 percent in the coming financial year.

Microsoft was also seeing online advertising revenue increase quarterly and was on course to reclaim all the ground it lost after shifting to a new ad platform last year, according to Liddell.

Microsoft reduced its earnings expectations for the fiscal second quarter ending Dec. 31 by US$1.5 billion to reflect a likely drop in revenue due to the delayed release of its new Vista operating system, which is due out in January.

Liddell raised the company's revenue expectations for the fiscal year from US$50 billion to US$50.9 billion, however, based on strong Xbox sales and the planned new releases of Windows and Office.

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