Microsoft easily hurdled analysts' expectations in its fourth quarter yesterday, returning a profit of $1.36bn (£834m), or 50 cents a share, on sales of $4bn (£2.45bn). First Call consensus expected the world's largest software developer to earn 48 cents a share in the quarter.
Officials, however, said it was "highly unlikely" 1999 sales growth would match the 28 percent pace set in 1998.
Microsoft chief financial officer Greg Maffei, as usual, urged analysts not to increase earnings estimates because of questions about Asia, Year 2000 spending and product transitions. For fiscal 1999, Maffei said Asia's continuing financial problems would shave about 3 percent from annual revenue.
In the first quarter, the chief financial officer said Microsoft revenue will be down about $200m (£122.7m) with earnings per share off about a penny from the fourth quarter results. Maffei said revenue will gain slightly in the fiscal second and third quarters with fourth quarter sales roughly flat sequentially. Office 1999, possibly named Office 2000, will hit the market in the third quarter.
Despite the caution, Microsoft normally finds a way to surprise Wall Street and the fourth quarter wasn't any different.
Strong early sales of its Windows 98 operating system software and the continued success of its Office 97 offering helped improve fourth quarter sales by 26 percent versus the year-ago period when it earned $1.05bn (£644m), or 40 cents a share, on sales of $3.17bn (£1.95bn).
"We got off to a super start with Windows 98," said Maffei, who added that Windows 98 added about $150m (£92m) in sales for the quarter. Although Microsoft sold more than one million copies of Windows 98 since its June 25 debut, Maffei wasn't about to predict that sales would continue on its blistering pace.
"We continue to be cautious about Windows 98, a few days results is not predictive," said Maffei.
For the year, Microsoft raked in $4.49bn (£2.75bn) or $1.78 a share, in the fiscal year on record sales of $14.48bn (£8.88bn). Excluding a one-time write-off charge related to the purchase of WebTV, the $1.78 a share in earnings represents a 35 percent improvement versus the year-ago period when it pocketed $1.32 a share.
Company officials announced the continuation of its stock repurchase program. In fiscal 1998, it repurchased more than 38.8 million shares. In the fourth quarter, Microsoft bought 10.1 million shares worth $859m (£527m).