Microsoft's profit doubles, warchest grows to $61 billion

Microsoft posted solid fiscal third quarter results with revenues of $9.62 billion, up five percent from the same period in the prior year. Profit almost doubled from $1.32 billion to $2.56 billion, but missed expectations of analysts. The Q3 2004 result included legal charges of $2.53 billion while Q3 2005 posted $768 million in legal charges. Excluding legal fees, Microsoft would have posted net earnings of $3.3 billion.

According to the company, the results were driven by server and tools - Exchange and SQL Server in particular - with experienced 12 percent growth for their segments. Revenues for mobile and embedded products climbed 31 percent.

Microsoft presented a strong balance sheet with cash and short term investments swelling from about $38 billion in Q3 2004 to almost $61 billion at the end of March.

Microsoft executives believe financial results to continue to improve in the current quarter (fiscal Q4) with at least nine percent revenue growth to above $10 billion and earnings of more than $4 billion. Scott Di Valerio, corporate vice president and corporate controller expects an 8 to 9 percent revenue increase in the firm’s client business as well as 16 to 17 percent in the server business. For the fiscal year, Microsoft forecasted revenues between $43 and $44 billion and operating income between $18.3 and $18.9 billion. (THG)