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Tuesday, October 20, 1998 Published at 22:03 GMT 23:03 UK


Business: The Company File

Microsoft, IBM provide profit boost

A successful launch of Windows 98 boosted Microsoft's earnings

The ongoing rally on Wall Street should get a boost on Wednesday after two of the world's biggest technology companies reported better-than-expected profits for the latest quarter.

Latest earnings figures from Microsoft and IBM were announced after the New York market had closed.

The firms' results topped off a day dubbed "Super Tuesday" on Wall Street because a spate of earnings figures from some of the country's top companies which kicked off the latest reporting season.

The good news led many to predict that the recent rally in US shares, which looked as if it could have run out of steam by close of trade on Tuesday, would continue.

Windows 98 boosts Microsoft

Microsoft reported a 58% increase in earnings on a 26% increase in sales in the latest quarter.


[ image: Microsoft's chairman Bill Gates has a lawsuit to worry about]
Microsoft's chairman Bill Gates has a lawsuit to worry about
The company earned $1.52bn, or 56 cents a share, in its first quarter to the end of September, up from $959m, or 36 cents a share, a year earlier.

Sales rose to $3.95bn from $3.13bn.

The figures easilly beat forecasts on Wall Street.

Analysts had expected the company to earn 49 cents a share on average.

Microsoft said demand for its Windows 98 operating system upgrade was stronger than expected in several European countries as well as Japan, although it said the overall outlook for Asia remained "tepid".

The company said it sold 10m copies of Windows 98 through retail upgrades or installed on new personal computers since it was launched on June 25.

Microsoft reported results as the government's anti-trust case against it concluded its second day in Washington.

The company said it had done nothing wrong and was not obliged to take it easy on competitors.

In opening arguments on Monday, government lawyers questioned the credibility of Microsoft Chairman Bill Gates and said the company tried to bully its competitors.

IBM earnings up 7%

International Business Machines reported a 7% increase in its third quarter earnings, just ahead of Wall Street forecasts.

The world's largest computer maker said net earnings rose to $1.5bn in the quarter from $1.4bn a year earlier.

Earnings per share rose to $1.56 from $1.35, some three cents higher than the average forecast of $1.53 a share.

Sales rose to $20.1bn from $18.6bn. Service revenues were particularly strong, up 23% to $5.8bn.

Hardware revenues rose 4%, software revenues 5% and personal computer revenues were flat.

The company said economic turmoil in Asia had hit results. Asia-Pacific revenues fell 16% to $3.2bn in the quarter.

Sales in North America rose 15%, while revenues in the Europe, Middle East and Africa grew 16%.

IBM said the weakness in Asia and Latin America was "significant" in the short run but added it was entering the current quarter with strength in some key businesses.



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