Microsoft posts higher revenue, earnings

Today's Best Tech Deals

Picked by Macworld's Editors

Top Deals On Great Products

Picked by Techconnect's Editors

Microsoft Corp. said revenue increased 10 percent in its second fiscal quarter to US$8.54 billion, a fraction less than analysts had been expecting. It also announced a two-for-one stock split and an annual dividend for its shareholders.

Net income came in at $2.55 billion for the period ending Dec. 31, including a $282 million charge for investment impairments and a $126 million tax benefit relating to a favorable tax court ruling, the company said. That was up from net income of $2.28 billion in the prior year's second quarter, Microsoft said in a statement Thursday.

The company characterized its results as "solid" in every business despite the challenging economic environment, but it also sounded a note of caution: Microsoft doesn't expect a significant upturn in global IT spending in the short term, Chief Financial Officer John Connors said in the statement.

Revenue from server software grew 12 percent from a year earlier, including 40 percent growth for Microsoft's SQL Server 2000 database, the company said. MSN also had a strong quarter, with online advertising up 40 percent, Microsoft said.

Operating income came in at $3.26 billion including a charge of $210 million, which is what Microsoft estimates it will cost to cover state antitrust and unfair competition lawsuits.

Diluted earnings per share increased to $0.47, including a $0.03 charge related to Microsoft's estimate of the cost of class action lawsuits, a $0.05 charge for investment impairments, and a one-time benefit of $0.02 for the tax court ruling noted above. That compared to diluted earnings per share of $0.41 a year earlier, which included an $0.08 charge related to estimated class action lawsuit costs, Microsoft said.

The revenue figure of $8.54 billion compares with $7.74 billion in the same quarter a year earlier, the company said. Analysts had been expecting revenue of $8.59 billion, according to a poll by First Call/ Thomson Financial.

Microsoft also announced an annual dividend for shareholders and said its board has approved a two-for-one stock split. The dividend of $0.16 per share (pre-split) is payable March 7 to shareholders of record on Feb. 21. As a result of the split, shareholders will receive an additional share for each share they hold on Jan. 27, the company said.

Declaring a dividend shows the board's confidence in Microsoft's long-term growth opportunities and financial strength, Connors said in the statement.

Ahead of the earnings release, Microsoft's (MSFT) shares on the Nasdaq closed at $55.46, down $0.81 on the day, or 1.44 percent.

This story, "Microsoft posts higher revenue, earnings" was originally published by PCWorld.

Note: When you purchase something after clicking links in our articles, we may earn a small commission. Read our affiliate link policy for more details.
  
Shop Tech Products at Amazon