‘Brisk' XP sales can't save Microsoft Q3 results

Microsoft's fiscal third-quarter revenue climbed 13 per cent from a year ago, to $US7.25 billion, helped along by what it said were brisk sales of its recently launched Windows XP operating system. But the results fell short of what financial analysts had been expecting.

Net income for the period, to March 31, was $US2.74 billion, including an $847 million after-tax gain from the sale of its Expedia online travel subsidiary and an $806 million after-tax charge related to investments. That's an improvement on the $2.45 billion in net income reported in the same quarter a year ago.

Earnings per share came in at $0.49, including a $0.15 gain on the Expedia sale and a charge of $0.14 for the investment impairments. Earnings per share last year chimed in at $0.44.

Windows XP shipped on nearly 60 per cent of all new PCs sold during the quarter, marking a faster penetration rate than any of Microsoft's previous operating systems, the company said. That helped drive revenue growth of 11 per cent from what Microsoft calls its desktop platforms products.

John Connors, Microsoft's chief financial officer, described the revenue growth as solid and said operating results exceeded the company's expectations.

The figures still fell short of expectations, however. On average, financial analysts had been looking for revenue of $7.34 billion and earnings of $0.51 per share, according to Thomson Financial/First Call.

"While we look forward to slightly improved PC growth rates for the next quarter, our expectations for enterprise IT spending levels continue to be quite modest,'' Connors said.

Microsoft shares on the Nasdaq closed at $56.37 ahead of the results, down 0.46 per cent on the day. In the after-hours markets, the stock quickly sank almost $4, to $52.72.

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