Microsoft Enjoys Record Earnings First Quarter Profits Jump 22 Percent In Broad-Based Performance

Microsoft Corp. had record profits of $614 million for the first quarter of its fiscal year, up 22 percent over the same period in 1996, the software and media company said Monday.

The net earnings worked out to 95 cents a share, compared with 78 cents a share or $499 million a year ago. Revenues totaled $2.3 billion, up 14 percent from last year’s $2 billion.

The earnings came in toward the high end of analysts’ predictions. Analysts surveyed by IBES International Inc. expected about 90 cents per share, with a high of 98 cents and a low of 85 cents.

The results compare with a quarter last year that saw the launch of Microsoft’s new operating system for personal computers, Windows 95.

“This quarter, the company posted solid results across a wide range of businesses, including operating systems, personal productivity tools and enterprise solutions,” said Mike Brown, vice president and chief financial officer of the Redmond-based company.

Brown said the company was able to save some money in its sales and marketing and general administrative expenses through “re-engineering” some of its internal processes and product support.

Profit levels also improved because of the way software is being sold, Brown said. More software is now being sold through licensing arrangements, and delivered by downloading it into a user’s computer or by CD-ROM. That avoids the expensive packaging, diskettes and distribution costs of traditional boxed software, he said.

Microsoft introduced the latest version of Windows NT, its operating system for high-end personal computers and networks, in the quarter ended Sept. 30. Demand for the system is high, with 19 percent revenue growth for the quarter in the United States and Canada, Microsoft said.

Revenue was boosted by the inclusion of Windows 95 in nearly all the PCs that are being shipped. Since PC shipments have been strong this quarter, those sales fueled earnings.

Microsoft earns a royalty from almost every new PC sold. PC makers pay Microsoft about $43 a copy to pack Windows 95 with the machines, compared with the $30 they paid for Windows 3.0.