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Microsoft sees 8% profit growth in Q1, Q4 tops estimates

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SEATTLE: Microsoft Corporation sees its first-quarter profits coming in at 41 cents a share, up nearly 8 per cent from the year-ago period, the company's Chief Financial Officer John Connors said on Tuesday.



"Earnings per share will be up 3 cents from the prior year," Connors told analysts in a conference call following the release of Microsoft's fourth-quarter earnings report. The company earned 38 cents a share in the first quarter of 2000.

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Microsoft was on track to meet consensus analyst forecasts of profits of $1.88 per share for the whole fiscal year, Connors said. He said revenues for the year would climb 15 per cent while those for the first quarter would rise 5 per cent from the year earlier. "Current consensus estimates are about right," Connors said. "We're still at about $1.88."

Sales of the Windows operating system for common desktop computers were seen rising "slightly" in the first quarter, while sales of Windows for more powerful server machines would be up, Connors said without elaborating. Sales of applications such as the Office suite of business software would fall slightly from the year-ago period, he said.

Meanwhile, announcing its fourth quarter results, Microsoft said its profit rose 10 per cent, topping Wall Street estimates as gains on the software giant's investments offset weaker operating income. Profits rose to $2.41 billion, or 44 cents a share in the quarter, compared to $2.20 billion, or 40 cents a share a year earlier. Microsoft was expected to earn 42 cents a share, according to the consensus analyst estimate from First Call/Thomson Financial.

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Revenues also met expectations at $5.8 billion, compared to $5.76 billion a year earlier. Most analysts had trimmed their revenue forecasts for Microsoft after the company warned last quarter that business demand for personal computers looked weak.

However, before taxes, Microsoft also recorded $1.13 billion in income from gains on investments, meaning its net operating profit was 2.52 billion. A year earlier, investment gains were $485 million while operating income was $2.9 billion.

Shares in Microsoft rose to 79-3/32 in after-hours trading just after the company announced earnings. The stock closed at 78-1/2 in regular trading, up 5/16.

(C) Reuters Limited 2000.

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