Software giant Microsoft registered a quarterly profit increase of 24 per cent which, was in large measure due to the sales of Windows software for PCs. Its net income was £1.76 billion for the first financial quarter till October compared to ₤1.4 billion during the same period a year ago.
Its shares fell 2% to $24.27 in the after-the-bell trading in New York as the results did not meet analysts forecasts.
Chief financial officer of Microsoft, Chris Liddell conceded in a conference call to investors, "Our search advertising revenue has not been as strong as we'd like".
Investors and analysts have been complaining about Microsoft's share price, which has been stagnant for more than three years. They have been trading in a 52-week range around $23.82 to $30.20.
As a strategy to hike its stock price, the company said that it was to hastening up its share buyback programme. It aims to finish purchasing its remaining ₤10.6 billion shares by late 2006. Some shareholders also want to see the company issuing a bigger dividend.
Richard Williams, technology analyst at Garban Institutional Equities, however, does not feel convinced that the acceleration of share buyback programme would have any significant impact on Microsoft's stock price.
On the other hand, optimistic investors are hoping that with the launch of the new products and updates next year to its Microsoft Office software and SQL server software the share price will get an impetus.
The revenue outlook of the company was lowered, and analysts attribute it to the not too buoyant sales of Microsoft Xbox consoles. The PC shipments, on the other hand, rose for the quarter by 17 percent, according to the research firm IDC.
Microsoft, whose quarterly revenue rose to ₤5.46 billion up from ₤5.1 billion, expects PC sales to be robust with a growth of 9% to 11% in the financial year leading to June 2006.
The results also incorporated costs incurred for a legal settlement with RealNetworks.
The company expects earnings per share for this quarter to be at $0.32 to $0.33, which is short of Wall Street expectations of $0.35 per share.
Posted
on : Fri, 28 Oct 2005 12:10 GMT | Business News
By : Paula Jenkins
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