Vista sales help boost Microsoft

Deseret News (Salt Lake City), Apr 27, 2007 by Associated Press

SEATTLE -- Microsoft Corp.'s fiscal third-quarter profit jumped 65 percent, buoyed by sales of its new versions of Windows and Office and by upgrade coupons for the operating system issued over the holidays.

Earnings for the quarter ended March 31 rose to $4.93 billion, or 50 cents per share, from $2.98 billion, or 29 cents per share, in the same period last year.

Results included legal charges amounting to 1 cent per share, but tax benefits boosted profit by 2 cents per share.

Analysts surveyed by Thomson Financial forecast a profit of 46 cents per share.

Revenue for the quarter rose 32 percent to $14.4 billion. Wall Street was looking for $13.89 billion in sales.

Microsoft started selling its newest operating system, Windows Vista, to consumers at the end of January. Its "client" division, responsible for Windows, brought in $5.27 billion in sales, 67 percent higher than a year ago.

Microsoft said it deferred $1.2 billion in Windows Vista revenue to the third quarter, to account for upgrade coupons given to PC buyers during the holiday season before the consumer launch of the new operating system. Excluding this figure, client revenue totaled $4.1 billion.

Business division revenue, which includes sales of Office 2007, rose 34 percent to $4.83 billion.

Microsoft Chief Financial Officer Chris Liddell said the "excellent quarter" was due to better-than-expected sales of Vista and Office.

Liddell said Vista beat internal forecasts by $300 million to $400 million, and Office 2007 sales were $200 million better than expected.

The client division sales "are surprisingly ahead of where we thought they would come in," said Sid Parakh, an analyst at McAdams Wright Ragen. "They might indicate Vista is doing fine."

Microsoft's entertainment and devices division, which includes the Xbox 360 game console and the Zune music player, posted a 21 percent sales drop to $929 million in an expected post-holiday slump.