Windows 95 Produces Big Payoff
Microsoft Corp., buoyed by strong sales of its Windows 95 software, Tuesday reported a 58 percent profit jump for its first fiscal quarter.
The performance exceeded analysts’ expectations and will likely improve investors’ view of the technology sector, where stock prices had declined since the August rollout of Windows 95 because of fears that it would not live up to its hype.
The third quarter profits and near-term outlooks of several other prominent technology companies - including International Business Machines Corp., Intel Corp. and Sun Microsystems Inc. - have also reassured Wall Street about the sector.
“When you have Intel and Microsoft come in with strong quarters, Sun had a blowout and IBM did OK, those are all positives,” said Gary Helmig, analyst at Soundview Financial Group.
Microsoft said it earned $499 million, or 78 cents per share, in the quarter. That compares to $316 million, or 51 cents per share, a year ago.
Revenue was $2.02 billion, a 62 percent increase over the $1.24 billion from the first quarter of last fiscal year.
The performance well exceeded the consensus estimate of 70 cents per share. Microsoft released earnings after stock trading ended. Its shares closed at $91.12-1/2, up $4.37-1/2 on the Nasdaq Stock Market.
“These excellent results reflect the continuing strength of our overall business and the initial achievements of Windows 95 in North America and Europe, and throughout many parts of the world,” Bob Herbold, Microsoft’s chief operating officer, said in a statement.
The company said 7 million units of Microsoft 95 have been purchased.
Investors have paid attention to the product because it is a basic ingredient of so many personal computers. And many developers of software applications, such as games or word processing programs, create their products to work in conjunction with it.
“A lot of other companies beside Microsoft are betting a lot on Windows 95,” said Dwight Davis, editor industry newsletter Windows Watcher.
“So, pretty much the whole industry has been looking to Windows 95 to give it a big boost, and according to these figures it suggests it’s coming through in that regard.”
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