Microsoft profits soared by 85 per cent in the third quarter to top $1 billion, largely on the back of sales of the company?s Office97 software suite.
Net income for the third quarter ended 31 March was $1.04 billion, up 85 per cent from the $562 million reported in 1996. Revenues for the quarter were up 45 per cent from a 1996 figure of $2.2 billion to $3.2 billion.
The results exceeded Wall Street expectations. Analysts had predicted revenues of around $2.9 billion. Net revenues at the nine-month mark are $8.18 billion.
Microsoft chief financial officer Mike Brown attributed the "incredible" results to sales of Office97, which have topped eight million licences since the product's launch in January. "Worldwide acceptance of Microsoft Office97 ignited these outstanding results," he said. "As corporate and retail customers upgraded to this new product with enthusiasm, we also realized solid gains in the OEM channel because of the continued popularity of the 32-bit Windows operating systems. And we reaped the benefits of an improved cost model."
But he was quick to remind Wall Street of the warning Microsoft issued three months ago that the fiscal 1998 year - beginning on 1 July - is likely to see a slowdown in growth. "Incredible results like these are seldom duplicated, and we are mindful of the very tough comparisons we will have in fiscal 1998," he said.
Other major growth areas included NT Server and Back Office, although the company noted slower growth for SQL Server and Microsoft Exchange.
Microsoft incurred $1.6 billion in operating expenses during the quarter, including $492 million on research and development, and $750 million on sales and marketing.
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