Microsoft bucked the trend in the computer industry by improving its first quarter results but warned that future figures may not be as good - and that is before it includes any Department of Justice fines.
But Microsoft's profits for the quarter to 30 September saw only a single figure rise, unusually for the giant, up eight per cent to $663 million on $3.13 billion turnover. That figure was up a healthy 36 per cent on last year's $2.3 billion. The first quarter results include a research and development write-off of $296 million related to the takeover of Web TV in August.
Chief operating officer Bob Herbold admitted Microsoft has many challenges ahead. ?The operational efficiencies gained within the business in the recent past are not likely to continue at the same rate and this fiscal year will see fewer product launches than prior years,? he warned.
Microsoft?s costs rose from $1.39 billion to $2 billion to roughly keep pace with its rising turnover. Growth in its OEM business and in its European channel revenue, which rose by 50 per cent over the year to $641 million, saved Microsoft from cuts in profit. Last week, many technology companies, including Seagate and Sun Microsystems, reported poor results but Microsoft just met analysts? predictions if the Web TV charge was ignored. Microsoft has traditionally beat predictions.
Chief financial officer Greg Maffei said sales of Office 97, server products and the Windows 95 and NT Workstation operating systems grew rapidly.
According to sources close to Microsoft, the company said it has agreed to buy back 5.8 million shares over five years but could not give out details because the deal is under an non-disclosure agreement. Another source said Microsoft has bought back 2.1 million shares of stock this quarter.
Microsoft also said it has invested in Wildfire Communications, a telephony and speech recognition specialist, as part of the three-year old company?s $12 million fourth round of venture capital financing
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