Business sales sag for Microsoft
A First Call Corp. consensus had expected Microsoft to earn 41 cents a share in the quarter.
Ahead of the earnings report, Microsoft (msft) shares closed up 1/4 to 78 15/16.
Company officials said it was hurt by weak sales of personal computers to business in the wake of concerns about the Y2K computer bug. Business PC sales were slow during January and February, and a recovery in March wasn't enough to make up lost revenue.
The $5.66 billion in sales marks a 23 percent improvement from the year-ago quarter when it pocketed $1.92 billion, or 35 cents a share, on sales of $4.6 billion.
"OEM revenue was light as demand for business PCs remained slow in the quarter, and we remain guarded about near-term growth," said Microsoft Chief Financial Officer John Connors, in a prepared release. "However, PC demand appeared to pick up late in the quarter, and with the launch of Windows 2000 we are excited about the opportunity to help customers migrate to this new generation of platform products."
So-called whisper estimates winding through Wall Street on Thursday pegged the software giant for a profit of 45 cents a share.
Most analysts were expecting total sales of between $5.75 billion to $5.9 billion.
Retail sales of Windows 2000 were a bit higher than the company expected. Still, sales through computer makers who install the program directly on new PCs were hurt by weak sales of business computers.
Microsoft (msft) "As we talked to our PC analysts and semiconductor analysts, it became evident just how severely PC demand was affected, primarily in January and February," said Goldman Sachs analyst Richard Sherlund. "Although it came back in March, it was too light to make up for the earlier slowdown."
Last quarter Microsoft earned $2.4 billion, or 47 cents a share, on sales of $6.1 billion.
Its shares have suffered of late, falling from a 52-week high of 119 15/16 in December to below 80 this week.
Twenty-eight of the 31 analysts following the stock maintain either a "buy" or "strong buy" recommendation.
First Call expects the company to earn $1.69 a share in the fiscal year.