Microsoft Corp on Thursday reported strong sales for the latest quarter and a profit that slightly surpassed Wall Street estimates, but its financial results were muddled by the late arrival of important new products.
Sales rose 6 percent in the quarter ended last month, to US$12.5 billion. But the company said that showing would have been much stronger if it had not deferred US$1.64 billion in revenue as a result of delays in the latest versions of its mainstay products, Windows Vista and Office 2007. They will be introduced next week.
Without the one-time move, sales would have been 20 percent higher than in the quarter a year earlier, chief financial officer Christopher Liddell said.
The quarterly results "exceeded our expectations across the board," including healthy sales of PC software, Liddell said.
Microsoft's video game business surged in the quarter, as revenue grew 75 percent, to US$2.96 billion, helped by strong year-end sales of its Xbox 360 console and hit games like Gears of War.
Sales of server software used in corporate data centers also continued to be strong, with revenue up 17 percent, to US$2.85 billion. Operating profit rose 35 percent, to more than US$1 billion. The server group -- operating systems, databases and back-end programs for e-mail systems -- has become a third strong business line for Microsoft, in addition to the lucrative Windows and Office lines.
"This is a pretty strong quarter with nearly all of the businesses contributing," said Charles di Bona, an analyst at Sanford C. Bernstein & Co.
Net income fell 28 percent, to US$2.63 billion, from US$3.65 billion in the period a year earlier, with the fall-off attributable to the deferring of revenue.
To help the PC industry cope with the product delay, Microsoft offered free or discount coupons for upgrades to Windows Vista and Office 2007. That allowed PC makers to sell new computers late last year with the promise that users would be able to upgrade to the new Microsoft products, and prevent PC sales from stalling.
Microsoft did not recognize the Windows or Office revenue from those machines until users bought the upgrade coupons or decided to use the older software.
The accounting treatment cut US$0.11 a share from earnings in the December quarter, leaving them at US$0.26 a share. That was US$0.03 a share higher than the Wall Street consensus of US$0.23, as compiled by Thomson First Call. Microsoft had announced the coupon program in October, and said that about US$1.5 billion in revenue would be deferred. The higher US$1.64 billion figure reflected stronger PC sales than Microsoft anticipated.
The revenue deferred from the December quarter will be recognized this period. The deferral, analysts say, is simply an accounting shift from one quarter to the next, adding about US$0.12 a share in the current quarter.
Microsoft said that it expected revenue this quarter of between US$13.7 billion and US$14 billion, and earnings of between US$0.45 and US$0.46 a share, in line with analysts' expectations. For the full fiscal year, which ends in June, Microsoft said its revenue would reach US$50.2 billion to US$50.7 billion, while profit would be between US$1.45 and US$1.47 a share.
The company is betting heavily on the consumer electronics business for future growth, and late last year it introduced a digital media player, Zune, to compete with Apple Inc's iPod.
ROLLER-COASTER RIDE: More than five earthquakes ranging from magnitude 4.4 to 5.5 on the Richter scale shook eastern Taiwan in rapid succession yesterday afternoon Back-to-back weather fronts are forecast to hit Taiwan this week, resulting in rain across the nation in the coming days, the Central Weather Administration said yesterday, as it also warned residents in mountainous regions to be wary of landslides and rockfalls. As the first front approached, sporadic rainfall began in central and northern parts of Taiwan yesterday, the agency said, adding that rain is forecast to intensify in those regions today, while brief showers would also affect other parts of the nation. A second weather system is forecast to arrive on Thursday, bringing additional rain to the whole nation until Sunday, it
LANDSLIDES POSSIBLE: The agency advised the public to avoid visiting mountainous regions due to more expected aftershocks and rainfall from a series of weather fronts A series of earthquakes over the past few days were likely aftershocks of the April 3 earthquake in Hualien County, with further aftershocks to be expected for up to a year, the Central Weather Administration (CWA) said yesterday. Based on the nation’s experience after the quake on Sept. 21, 1999, more aftershocks are possible over the next six months to a year, the agency said. A total of 103 earthquakes of magnitude 4 on the local magnitude scale or higher hit Hualien County from 5:08pm on Monday to 10:27am yesterday, with 27 of them exceeding magnitude 5. They included two, of magnitude
CONDITIONAL: The PRC imposes secret requirements that the funding it provides cannot be spent in states with diplomatic relations with Taiwan, Emma Reilly said China has been bribing UN officials to obtain “special benefits” and to block funding from countries that have diplomatic ties with Taiwan, a former UN employee told the British House of Commons on Tuesday. At a House of Commons Foreign Affairs Committee hearing into “international relations within the multilateral system,” former Office of the UN High Commissioner for Human Rights (OHCHR) employee Emma Reilly said in a written statement that “Beijing paid bribes to the two successive Presidents of the [UN] General Assembly” during the two-year negotiation of the Sustainable Development Goals. Another way China exercises influence within the UN Secretariat is
Taiwan’s first drag queen to compete on the internationally acclaimed RuPaul’s Drag Race, Nymphia Wind (妮妃雅), was on Friday crowned the “Next Drag Superstar.” Dressed in a sparkling banana dress, Nymphia Wind swept onto the stage for the final, and stole the show. “Taiwan this is for you,” she said right after show host RuPaul announced her as the winner. “To those who feel like they don’t belong, just remember to live fearlessly and to live their truth,” she said on stage. One of the frontrunners for the past 15 episodes, the 28-year-old breezed through to the final after weeks of showcasing her unique