Microsoft Toes The Line

Buoyed by strong desktop-software sales, Microsoft
delivered results in line with forecasts and said it expects both revenues and earnings to hold mostly
steady next quarter.

In the quarter ended June 30, Microsoft reported revenues of $7.25 billion,
a 10-percent jump from the same period a year ago. Net profit came in at
$1.53 billion, up from the $65 million reported last year, when the company
took a variety of investment-related charges.

Excluding charges, Microsoft reported earnings of 43 cents a share, slightly
above estimates of analysts polled by First Call/Thomson Financial expected
the company to return earnings of 42 cents.

“Robust customer demand for Windows XP and other desktop software enabled us
to deliver strong operating results this quarter, in spite of continued
uncertainty in the technology markets,” said John Connors, Microsoft’s CFO,
in a statement. “While the current environment remains challenging, we’re
making important investments in product development, marketing and in our
sales force that will position us for success in the current year and

The Redmond, Wash., company’s desktop software sales hit $4.97 billion, a 9-percent increase in the quarter. Microsoft reported strong demand for its
business versions of Windows, as well as Office. At the end of the month,
Microsoft will switch over to its controversial software-licensing policy,
which requires customers to automatically upgrade their Microsoft software
instead of picking when to do so.

In an effort to buff up its sales, Microsoft recently announced it would add 450
salespersons over the next fiscal year
, the company’s largest sales
expansion in a decade.

Looking ahead, Microsoft said it expected revenues to dip next quarter to
between $7 and $7.1 billion. The company forecast diluted earning per share
would be between 42 and 43 cents.

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