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Friday, 20 July, 2001, 10:33 GMT 11:33 UK
Microsoft disappoints markets
Microsoft logo
Some of the biggest names in America's high-tech sector unveiled their quarterly results on Thursday.

Microsoft headed the list, with profits for its fiscal fourth quarter falling well within Wall Street estimates.

However, its shares headed south in after-hours trading on Thursday after it reported flat demand in the world PC market.

Sun Microsystems, which posted a loss, also managed to beat forecasts, while PC maker Gateway reported a wider-than-expected loss.

The world's biggest maker of telecoms equipment, Nortel Networks, added to the gloom with its own hefty loss.

Only the online auction site, eBay, succeeded in delivering upbeat results.

Share slide for Microsoft

Microsoft's shares dropped nearly 5% in after-hours trading.

"We are expecting the first quarter of fiscal 2002 to experience relatively soft demand in PCs as people wait for Windows XP," said Microsoft's chief financial officer John Connors.

Windows XP, the firm's new operating system, is scheduled for a 25 October launch.

The software giant's shares, which had earlier closed at $72.57 on Nasdaq, fell to $69.20.

PC shipments

Mr Connors also said: "For the full year fiscal year, PC shipments should be in the mid-single digits.

"The first quarter [ending in September] will be flat, the last three quarters will see positive growth."

The encouraging thing is that despite a really tough quarter these guys are still earning money and still growing the business

Scott McAdams
McAdams Wright Ragen
Microsoft reported robust sales in all its main business segments.

Operating profits for the fourth quarter - excluding a $2.6bn non-cash charge for underperforming investments - was $2.75bn.

This compared to profits of $2.55bn for the same period a year ago.

The figures looked less impressive with the charge stripped out, leaving the software giant with a tiny profit of $66m.

But Scott McAdams, president at McAdams Wright Ragen, branded the results as "pretty good news".

"The encouraging thing is that despite a really tough quarter these guys are still earning money and still growing the business," he said.

Sun, Gateway and Nortel

Sun Microsystems posted a fourth-quarter loss of $88m as its customers continued to cancel or delay purchases of high-power computer workstations and network servers.

The California-based company lost the equivalent of three cents per share during the three months ending 1 July, compared with a profit of $720m, or 21 cents per share, over the same period last year.

Trouble also afflicted Gateway, which reported a wider-than-expected loss for the second quarter on revenues of $1.5bn.

The company lost $9m before taxes, or two cents per share, down from earnings of $118.2m, or 36 cents per share, in the year-ago quarter.

Meanwhile, the world's biggest maker of telecoms equipment, Nortel Networks, said it lost $19.4bn in its most recent three-month period.

It blamed slowing demand for technology and telecommunications products.

Upbeat eBay

Internet auction site eBay bucked the trend with an upbeat set of results.

We're seeing sustained growth across categories, trading formats, and in our international operations

Meg Whitman, eBay chief executive
Reporting a second quarter profit, the company said its online trading site remained popular with consumers and businesses during the economic downturn.

Ebay said it earned $24.6m, or nine cents per diluted share, in the quarter.

Ebay shares jumped in after-hours trading, as investors reacted positively to the news.

"We're seeing sustained growth across categories, trading formats, and in our international operations," eBay Chief Executive Meg Whitman said in a statement.

The company said its revenues rose to $180.9m from $98.2m in the same quarter a year ago.

Revenues were well above most analyst forecasts for second-quarter sales of about $165m.

See also:

19 Jul 01 | Business
Nortel reports near $20bn loss
19 Jul 01 | Business
Wall Street gives up early gains
18 Jul 01 | Business
IBM profits rise
19 Jul 01 | Business
Microsoft asks for court review
15 Jun 01 | Business
Nortel cuts another 10,000 jobs
12 Jul 01 | Business
Microsoft in Windows climbdown
29 Jun 01 | Business
Judge's view on Microsoft
13 Jul 01 | Business
New Mexico breaks ranks on Microsoft
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