Microsoft: Growth To Improve
Microsoft beat Wall Street's expectations yesterday as it reported a net profit of $3.7 billion for the quarter ended June 30. This is up 38% from the same quarter last year.
The company said that growth will improve over the next year. It has already shown improvement in its Server Tools division, with a 32% operating income increase.
Microsoft reported a 9% increase in revenue, with the the lowest annual revenue growth rate the company has had since it went public. Todd Bishop with seattlepi.com writes:
In the company's largest business line, the Windows operating system for personal computers, operating profit rose 7 percent to $2.18 billion. The Home and Entertainment Division, which includes the Xbox console, narrowed its operating loss to $179 million.
Although profits dipped in some divisions, including the unit that includes the Office product line, the company was pleased with the quarterly results overall, said Chris Liddell, recently appointed chief financial officer, in an interview yesterday. The performance was "broad-based, really, across all the businesses," he said.
Microsoft did see its share of expenses. In fact, sales and marketing expenses increased 15%, reaching $2.8 billion, up from $2.4 billion the previous year.
"Sales and marketing expenses were surprisingly high," said Goldman Sachs analyst Rick Sherlund. "It was offset by non-operating income. Investors don't like to see that."
Microsoft's shares consequently fell today. Yesterday, shares closed at $26.44. According to TheStreet.com, shares recently dropped 71 cents to $25.73.
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