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Last Updated: Thursday, 21 July 2005, 21:00 GMT 22:00 UK
Computer demand boosts Microsoft
A version of Microsoft Windows XP
Microsoft expects "double digit" growth next year
Strong demand for laptops, personal computers and servers helped push up fourth-quarter profits at Microsoft, the company said on Thursday.

The globe's largest software maker said net profits were $3.70bn (2.11bn) for the financial period ending 30 June.

That was compared to $2.69bn (1.54bn) in the same period in 2004.

Chief financial officer Chris Liddell said Microsoft would benefit greatly in the next financial year from a new Xbox video game console and new products.

He said recent strong revenue growth was "driven by healthy, broad-based demand across all customer segments and channels".

Revenue during the period rose to $10.16bn from $9.29bn.

'Product pipeline'

"These results provide solid momentum heading into fiscal 2006, which is shaping up to be a strong year for growth and investment," said Mr Liddell.

"We expect double digit revenue growth next year, kicking off the strongest multi-year product pipeline in the company's history."

The company announced record revenue of $39.79bn for the fiscal year ending on 30 June, an 8% increase over the $36.84 billion reported last year.

There's a lot of investors in this market who think the company won't be able to sustain this type of performance in the future
Fred Burke, Johnson Lemon Asset Management

The main drivers of sales for Microsoft's Windows, Office and Server software products - PC makers and Asian component manufacturers - have reported healthy demand for PCs.

"During the fourth quarter, continued strong PC and server shipment growth and improved information technology spending compared to fiscal year 2004 contributed to our overall revenue growth," said a statement issued by Microsoft's headquarters in Redmond, Washington.

However despite the strong results and positive vision of the future shares in the firm fell in after-the-bell trading in New York.

"There's a lot of investors in this market who think the company won't be able to sustain this type of performance in the future and that is why we are seeing such a lukewarm response to the results," said Fred Burke, a fund manager at Johnson Lemon Asset Management in Washington.

Chinese battleground

On Wednesday Microsoft said it was suing Google for hiring one of its vice presidents to set up a research centre in China.

The country is a new battleground for the two firms, which offer online and desktop search tools.

However, when asked about China's revaluation of its currency on Thursday, Mr Liddell replied: "That's not a significant issue for us.

"We do have revenues coming in internationally and Europe is the most significant (source of overseas revenue)."

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