No. 1 software maker posts gain in revenues but profits edge lower, hurt by stock option costs.
January 22, 2004: 4:47 PM EST
By Paul R. La Monica, CNN/Money senior writer
NEW YORK (CNN/Money) - Microsoft Corp. Thursday reported lower net earnings for the latest quarter but sales that topped Wall Street forecasts, the latest sign that the tech sector recovery is in full gear.
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But the stock sold-off after hours as investors appeared to worry about another steep decline in a key indicator of future sales growth.
Sales came in at $10.15 billion, a 19 percent increase from the same period last year, and well ahead of the $9.7 billion in revenues that Wall Street analysts were expecting.
But unearned revenue, which measures the sales from software license renewals that Microsoft expects to book in coming quarters, fell about $400 million from the fiscal first quarter, to $7.85 billion.
The software maker said net income fell to $1.55 billion, or 14 cents a share, from $1.87 billion, or 17 cents a share, a year earlier.
But the results included a 6 cent-a-share charge for compensation costs associated with its new restricted stock program and a 14-cent-a-share charge for a stock option transfer program, which allowed employees to sell underwater stock options.
Excluding charges, it appears that Microsoft reported earnings of 34 cents a share, said Adam Adelman, senior analyst with asset management firm Philippe Investment Management, which owns shares of Microsoft. Analysts were expecting earnings of 30 cents a share.
But shares of Microsoft (MSFT: Research, Estimates) fell about 2 percent in after-hours trading, according to Instinet, following a dip of about 1 percent in regular trading on Nasdaq Thursday.
The stock has been a laggard during the recent tech rally due to concerns about slowing growth, the emergence of the Linux operating system as a threat to Microsoft's Windows, and several high profile computer viruses that have targeted Microsoft software
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