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Microsoft profit keeps rising

Fri., Jan. 25, 2008

SEATTLE – Microsoft Corp. said Thursday its fiscal second-quarter profit topped analysts’ expectations and climbed 79 percent, buoyed by rising sales of Windows-based personal computers.

For the quarter ended Dec. 31, profit increased to $4.71 billion, or 50 cents per share, from $2.63 billion, or 26 cents per share last year.

Analysts polled by Thomson Financial had forecast a profit of 46 cents per share.

Revenue rose 31 percent to $16.37 billion from $12.5 billion in the year-ago quarter, ahead of the analysts’ prediction of $15.95 billion in sales.

Sarah Friar, an analyst for Goldman Sachs, pointed to Microsoft’s improved profitability, which was due to better-than-expected results in two high-margin areas, software for businesses and Xbox 360s.

Microsoft’s client division, responsible for Vista, posted revenue of $4.34 billion. The company said it has sold 100 million copies of Vista since its January 2007 launch. The business division, which includes Office, brought in $4.81 billion in sales.

Sales from the division responsible for the Xbox 360 game console and the Zune digital media player edged up 3 percent to $3.06 billion. Shares of Microsoft rose $1.54, more than 4.5 percent, in extended trading, after gaining $1.32, or 4 percent, to close the regular session at $33.25.

Alaska Air Group Inc. said Thursday it swung to a fourth-quarter profit due to special gains, though adjusted results reflected a wider loss than Wall Street had expected, as fares failed to keep up with higher fuel costs. The parent company of Alaska Airlines and Horizon Air posted a profit of $7.4 million, or 19 cents per share, versus a loss of $11.6 million, or 29 cents per share, a year earlier. Revenue rose 8 percent to $853.4 million, due mostly to rising passenger revenue.

However, adjusted for fuel hedging as well as special charges and benefits, Alaska Air’s loss widened to $17.9 million, or 46 cents per share, from $3.4 million, or 8 cents per share.

E-Trade Financial Corp. posted a hefty loss for the fourth quarter on Thursday as the struggling discount brokerage dumped a book of risky investments at a steep discount. In an illustration of how the mortgage industry crisis has spread to other types of companies, the New York-based brokerage in November said it sold a $3 billion portfolio of mortgage debt to Citadel Investment Group at a $2.2 billion loss.

Hampered by that sale, E-Trade lost $1.71 billion, or $3.98 per share, in the fourth quarter, after a profit of $176.7 million, or 40 cents per share, in the fourth quarter of 2006. Analysts surveyed by Thomson Financial forecast a smaller loss of $2.90 per share.

Hershey, the nation’s largest candy maker, capped a difficult year with a 65 percent drop in quarterly profit and said Thursday the increasing competition and rising costs that hurt it in 2007 show no sign of easing. The Hershey Co. spent heavily in the quarter to close plants in North America as part of a broader strategy to expand in growing regions of the world, such as China, India and Brazil. But it also reported that sales were flat for the quarter and the year.

The Hershey, Pa.-based maker of Hershey’s Kisses and Reese’s said it earned $54 million, or 24 cents a share, for the three months ended Dec. 31. That compared with a profit of $153.6 million, or 65 cents per share, in the same period a year earlier.

Union Pacific Corp. said Thursday that price increases and improved efficiency helped the railroad increase its fourth-quarter profit 1 percent even though shipping volume was flat and diesel prices soared. The Omaha-based railroad said it earned $491 million, or $1.86 per share, in the quarter that ended Dec. 31. That’s up from the $485 million, or $1.78 per share, it earned in the same period a year ago.

Union Pacific said its revenue grew to about $4 billion in the fourth quarter from $3.8 billion in 2006. Analysts polled by Thomson Financial expected the railroad to earn $1.77 per share on revenue of $4.2 billion.

AT&T Inc. earned $3.1 billion in the fourth quarter as its wireless and broadband businesses did well, a trend the nation’s largest telecommunications company said would help it keep growing even in a sputtering economy.

AT&T’s net income for the quarter came to 51 cents per share, it said Thursday. During the same period in 2006, the company earned $1.9 billion, or 50 cents per share. The results that quarter did not include the earnings of BellSouth because AT&T’s takeover wasn’t completed until final days of the period.

Revenue in the most recent quarter nearly doubled to $30.35 billion from $15.9 billion, mostly due to the takeover of BellSouth.

Xerox Corp. on Thursday said its profit rose 79 percent in the fourth quarter on a mix of cost controls and growth in equipment financing and services. The office equipment maker also said its board approved an additional $1 billion for its stock buyback plan, on top of the $370 million remaining under the existing plan.

The company posted net income of $382 million, or 41 cents per share, compared to a year-earlier profit of $214 million, or 22 cents per share. Revenue rose to $4.88 billion from $4.38 billion a year earlier.


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