Microsoft 4Q Profit Rises, but Wall Street Is Disappointed
Date : 18 Jul 2008 Category : Technology
NewsFactor NetworkMicrosoft cited weakness in the online business, which makes most of its money from Web advertising.
With a Yahoo Inc. search deal uncertain at best, Microsoft also plans to invest hundreds of millions of dollars more than expected in the next year to whip its unprofitable online operations into shape.
Analysts, however, wondered how long Wall Street can wait to see those bets pay off.
Shares dropped $1.41 in morning trading, to $26.11.
Microsoft said Thursday its fiscal fourth-quarter profit jumped 42 percent -- or 13 percent, factoring in a hefty charge a year ago -- as revenue topped $15 billion.
For the three months ended June 30, Microsoft's profit jumped 42 percent to $4.3 billion, or 46 cents per share. In the year-ago quarter, earnings totaled $3 billion, hurt by more than $1 billion in charges related to defective Xbox game consoles.
Revenue increased 18 percent to $15.8 billion from $13.4 billion last year, just ahead of Wall Street's average forecast of $15.7 billion, according to a Thomson Financial survey. The revenue rise would have been 14 percent if not for weakness in the dollar.
"Those are very good numbers for a company of our size, in what many companies are finding challenging conditions," Microsoft's chief financial officer, Chris Liddell, said in an interview.
Sid Parakh, an analyst for McAdams Wright Ragen, wasn't buying it.
"The bottom line was disappointing," he said in an interview. "Across the board, they are investing more in growth, which is hurting the bottom line. That's been a concern about Microsoft that investors have felt for a long time."
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