Microsoft Quarterly Profit Hits $4.29 Billion

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Microsoft Quarterly Profit Hits $4.29 Billion
By Jessica Mintz
October 26, 2007 7:32AM

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Microsoft sold 88 million copies of Windows Vista since the operating system went on sale in January -- 28 million since the end of July -- according to Colleen Healy, general manager of investor relations for Microsoft. The division responsible for Vista contributed $4.14 billion in revenue in the quarter.

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   After Microsoft Relevant Products/Services Corp. executives laid out plans in July to win at Web search, online advertising, Web-based software and video games, analysts wondered if the world's largest software maker had too many balls in the air.

Microsoft's answer, in the form of its fiscal first-quarter results announced Thursday, was a resounding "no."

Microsoft said its profit soared 23 percent to $4.29 billion, or 45 cents per share, from $3.48 billion, or 35 cents per share, during the same period last year, as brisk sales of the new "Halo 3" video game, Windows and Office helped it breeze past Wall Street's expectations.

Investors sent Microsoft shares up more than 12, or $3.94, to $35.93 at the open of trading Friday, a new 52-week high.

Analysts, on average, had forecast a profit of 39 cents per share, according to a Thomson Financial poll.

Revenue for the period ended Sept. 30 grew 27 percent to $13.76 billion from $10.81 billion last year, beating analysts' forecast by more than $1 billion.

"It's a very good report," said McAdams Wright Ragen analyst Sid Parakh. "I think people are going to revisit how they look at Microsoft. So far they've been viewing it as value stock. Going forward, they'll think about it as a growth stock."

Microsoft sold 88 million copies of Windows Vista since the operating system went on sale in January -- 28 million since the end of July -- according to Colleen Healy, general manager of investor relations for Microsoft.

The division responsible for Vista contributed $4.14 billion in revenue in the quarter, 25 percent more than a year ago. Microsoft booked 27 percent more annual license agreements for Windows than in the year-ago quarter, a sign businesses are committed to following Microsoft into the Vista era.

Sales from the unit that makes the Office 2007 software suite rose 20 percent to $4.11 billion.

Robust PC sales worldwide boosted both operating system and Office sales, but Healy said those divisions also benefited from customers choosing higher-priced premium versions of Vista.

Sales of "Halo 3" and the Xbox 360 consoles it is played on pushed the company's entertainment and devices division to a profit of $165 million in the quarter -- the Xbox division's second time ever in the black. The unit's revenue nearly doubled from a year ago to $1.93 billion, including $330 million from "Halo 3." Microsoft sold 1.8 million Xbox 360 consoles in the quarter. (continued...)

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