Microsoft's first quarter profit, revenue rise

23 Oct, 2004

Microsoft Corp late Thursday said its quarterly profit climbed as revenue rose 12 percent, driven by demand for the company's core software products from businesses and higher sales of personal computers and servers.
Earnings topped Wall Street estimates, but shares of Microsoft fell as analysts said the inclusion of expenses for stock-based compensation led to confusion about how results compared to expectations.
Net profit for the world's largest software maker rose to $2.9 billion, or 27 cents per share, including stock-based compensation, for its first fiscal quarter ended September 30, from a profit of $2.6 billion, or 24 cents per share, a year earlier.
Excluding stock-based compensation, Microsoft had a profit of 32 cents per share, according to several analysts.
That was above the 30 cents per share that analysts, on average, had expected, according to forecasts compiled by Reuters Estimates.
"The stock traded down a little bit because people don't realise you have to add back in 5 cents (for the stock compensation)," said analyst Brendan Barnicle of Pacific Crest Securities.
Microsoft Chief Financial Officer John Connors said the company would no longer break out stock-based compensation since it had accounted for that expense for all its previous fiscal year, making it easier to compare year-on-year numbers.
"We want to get folks looking at our GAAP results," Connors told Reuters, referring to Generally Accepted Accounting Principles.
In a break from technology industry practices, Microsoft last year began giving its employees stock awards rather than options, and said that it would account for the expense to better reflect its cost of doing business.
For the fiscal second quarter, Microsoft forecast revenue of $10.3 billion to $10.5 billion and earnings per share, including stock-based compensation, of 28 cents.
Analysts, on average, have forecast second-quarter revenue of $10.63 billion, according to Reuters Estimates.
Connors also said Microsoft expects computer shipments to grow 8 percent to 10 percent for its fiscal year to next June.
For the full fiscal year, Microsoft said it sees revenue of $38.9 billion to $39.2 billion and earnings per share, including stock-based compensation, of $1.07 to $1.09.
Analysts' full-year revenue estimate, on average, was for $38.92 billion.

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