Microsoft's portfolio bolsters profit

Microsoft beat analysts' predictions for the second quarter of its fiscal year, despite a slowdown in corporate demand.

The software giant reported record revenue of $6.11 billion for the period ending 31 December 1999 - a year on year rise of 18 per cent. Net income and diluted earning per share were $2.44 billion and $0.44 respectively. Excluding the settlement of an anti-trust suit with Caldera, which cost Microsoft a cool $275 million, net income grew by 31 per cent to $0.47.

Analysts said Microsoft's profit was bolstered by its massive investment portfolio, which is worth about $20 billion. Of the $640 million year-on-year increase in pre-tax income, investment and operating income grew by $436 million and $204 million respectively.

John Connors, Microsoft's chief financial officer, said there was "slowing demand for business PCs during the quarter".

"We remain cautious in our expectations for near-term PC demand and corporate software spending, and continue to anticipate moderate revenue growth through the remainder of fiscal 2000," he added.

Seperately, Microsoft submitted its arguments for the final phase of the anti-trust case brought against the software giant by the US Department of Justice. The 70-page document argues that Microsoft has the right to stop manufacturers tampering with Windows and cites a successful copyright case from 1976 when the Monty Python team sued ABC Television for cutting a 30-minute show by seven minutes.

This, says Microsoft, is not so dissimilar from computer manufacturers demand to customise Windows when it first appears on the consumers' screens.

Arguments are to be submitted by 22 February and a final decision in expected in April or May.