World's largest software company reports strong results but stock slips on 2005 guidance.
July 22, 2004: 4:43 PM EDT
NEW YORK (CNN/Money) - Microsoft Corp. reported strong gains in sales and profits for the latest quarter Thursday thanks to robust sales of software for personal computers and servers, but the stock fell in after-hours trading on disappointment over its outlook.
The Redmond, Wash.-based company, the world's biggest software maker, said net income rose to $2.7 billion, or 25 cents a share, in its fiscal fourth quarter ended June 30, from $1.5 billion, or 14 cents a share, a year earlier.
This year's figure includes the cost of Microsoft's restricted stock program as well as a tax benefit. Backing those items out, Microsoft's profit was 28 cents a share, a penny below Wall Street's expectations of 29 cents a share. The company posted earnings of 23 cents a share a year ago, excluding charges.
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Microsoft reported sales of $9.3 billion in the quarter, a 15 increase from $8.1 billion a year ago and ahead of the consensus estimate of $9.1 billion.
The news came as Wall Street was still buzzing about the company's plan, announced Tuesday, to return $75 billion to shareholders over the next four years through a stock buyback program, one-time special payout and increased dividend.
Shares of Microsoft (MSFT: Research, Estimates) sank nearly 4 percent after-hours on mixed guidance for the company's fiscal first quarter of 2005, which ends in September. Still, the stock, up about 6 percent in 2004, has shown signs of breaking out lately after being stuck in a narrow range for the past 2-1/2 years.
Microsoft said that earnings, excluding the cost of restricted stock for employees, would be about 30 cents a share in its fiscal first quarter. Wall Street had been expecting 32 cents a share, according to First Call.
The company did provide bullish sales guidance though, saying that it anticipated revenue for the quarter to be between $8.9 billion and $9 billion. The consensus estimate was $8.8 billion.
For the full year, Microsoft raised its sales and earnings forecasts but that merely brought its targets in line with what Wall Street had already been expected. The company said full-year earnings in 2005 would be between $1.31 and $1.34 a share, excluding the restricted stock costs. Analysts were forecasting $1.34 a share.
And Microsoft said sales in fiscal 2005 would be between $38.4 billion and $38.8 billion. The $38.6 billion midpoint of this guidance is a hair below Wall Street's prediction of $38.64 billion.
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