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Microsoft net meets Wall Street expectations

Microsoft Corp. posted higher quarterly earnings Thursday, meeting Wall Street expectations.
/ Source: Reuters

Microsoft Corp. posted higher quarterly profit Thursday, boosted in part by the launch of the Xbox 360 game console and SQL Server 2005 corporate database software program.

(MSNBC is a Microsoft-NBC joint venture.)

The world’s largest software maker said net income totaled $3.65 billion, or 34 cents per share, in its fiscal second quarter ended Dec. 31, compared to $3.46 billion, or 32 cents per share, a year earlier.

After excluding a tax benefit, Microsoft posted net income of 33 cents per share for the quarter, in line with the Wall Street consensus estimate, a company spokesman said. Microsoft shares edged higher in electronic trading after the results were announced.

Quarterly revenue rose to $11.84 billion vs. $10.82 billion in the year-earlier period. Analysts had forecast revenue at $11.97 billion on average. A Microsoft official said revenue was slightly below forecasts due to Xbox supply issues.

Bill Kornitzer, portfolio manager at Buffalo Funds, said many investors had been concerned that expectations were too high and that Microsoft’s report was reassuring.

“It was more a sense of relief than anything else,” he said. “Deferred revenue was a little light, but guidance for the next quarter was a little better than I expected.”

During the quarter, Microsoft launched the Xbox 360 and SQL Server 2005, the first in a series of crucial product launches over the next few quarters for the software giant, but concerns about soft PC demand tempered expectations for its results.

Microsoft forecast current-quarter earnings of 32 cents to 33 cents per share, compared with the analyst consensus of 33 cents, and revenue was projected at $10.9 billion to $11.2 billion, compared with a consensus view of $11.0 billion.

The new product launches, including the next version of its flagship Windows operating system, stand at the core of Microsoft’s efforts to revive a stock that has underperformed against every major stock index since the start of 2003.