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Thursday, 23 April, 1998, 07:11 GMT 08:11 UK
Microsoft nets profit rise
Windows 95: its successor looks like having a clear path onto the market
Microsoft has reported a 28% increase in earnings in its latest quarter, exceeding the expectations raised a month ago.

The software giant's fiscal third-quarter profits rose to $1.34bn or 50 cents per diluted share, from $1.042bn, or 40 cents a share, a year earlier. Revenues rose 18% to $3.77bn from $3.21bn.

Wall Street analysts had expected Microsoft to post earnings of 48 cents a share, as company executives projected in March.

Executive Vice-President Steve Ballmer said: "Business fundamentals continued strong across most geographies, especially North America, fueled by the continued strong adoption of Office 97 by large and small customers alike on a worldwide basis."

He said the company remains concerned about business in the Far East, "although there is some evidence that the business there is not getting weaker."

Microsoft stock jumped $4 to a record $98.875 in Nasdaq trading before the earnings were announced, boosted by fading concern about the ability of government antitrust regulators to hamper the software giant.

Appeals court judges sharply questioned government antitrust lawyers at a hearing in Washington on Tuesday and time is running out for regulators to block shipment of the forthcoming Windows 98 operating system, which is due to be sent to computer manufacturers around May 15.

Caution over future

Chief Financial Officer Greg Maffei tried to temper expectations of future growth, saying that earnings likely would decline by "a few pennies" per share in the current quarter from the third quarter.

He said earnings would be relatively flat in the first two quarters of fiscal 1999, although still up significantly over year-earlier levels.

Maffei also introduced several new cautionary factors, including a possible shift in corporate spending away from what is perceived as "discretionary" software and toward the more urgent matter of fixing any year 2000-related software bugs.

"It is critical to note that our growth has slowed for each of the last four quarters, and we are likely to experience slower growth for the balance of calendar 1998," he added.

BBC News
Financial Times specialist Louise Kehoe comments on Microsoft's caution, despite the profit increase
See also:

20 Apr 98 | Business
Netscape boss works for free
21 Apr 98 | Sci/Tech
Gates breaks Windows 98
21 Apr 98 | Sci/Tech
Microsoft challenges browser ruling
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