Microsoft Exceeds Earnings Forecast

First-quarter profits at Microsoft Corp. jumped 30 percent, helped by continued strong demand for the company’s Office 2000 and other business software.

The results easily beat Wall Street expectations, causing shares of the Redmond-based company to surge 5 percent in after-hours trading.

Microsoft reported net earnings of $2.19 billion or 40 cents a share for the quarter ended Sept. 30, compared with profits of $1.68 billion or 31 cents a share a year earlier.

Quarterly revenue rose 28 percent, from $4.19 billion to $5.38 billion, the company said Tuesday.

Microsoft shares closed at $86.31-1/4, down $1.56-1/4, on the Nasdaq Stock Exchange.

In other reports:

* Weak keyboard distribution and sales cut revenues and income for Spokane-based Key Tronic during its first fiscal quarter that ended Oct. 2.

Key Tronic posted total revenues of $41.8 million, compared with $42.3 million in the same period last year.

Income fell to $210,000 - 2 cents a share - compared with year-ago income of $493,000 - 5 cents a share.

In a conference call with analysts, Ron Klawitter, Key Tronic’s chief financial officer, said the company sold about 2.2 million keyboards in the first quarter, with an average selling price of about $12. Last year, the company sold 2.5 million units, with an average price of $13.75.

Key Tronic continues to move away from the keyboard business. Key Tronic also does manufacturing work for outside clients. That part of its business made up 46 percent of the company’s total revenues in the first quarter.

Key Tronic is also moving ahead with plans to build a new plant in Mexico. The facility will perform work for a client that Key Tronic has yet to name. Annual revenues from the contract are expected to exceed $50 million.

Klawitter said production in the new plant will start in January.

* Source Capital Corp. reported sharply higher net income for the third quarter and first nine months of 1999.

The Spokane-based commercial lender earned $305,158, or 22 cents pre share, compared with $169,298, or 12 per share, for the three-month period ending Sept. 30.

For the first nine months of 1999, the company earned $796,128, or 59 cents per share, compared with $506,728, or 37 cents per share, a year ago.

Loans and leases increased by one-third to $60.7 million, helping lift total assets to $65.1 million, up from $50 million a year ago.

Delinquencies were up slightly, to 3.98 percent of loans and leases from 3.45 percent a year ago.

Source also has offices in Seattle, Portland and Phoenix.

* Tacoma-based Labor Ready reported a 31 percent increase in sales during its third quarter ended Oct. 1.

The temporary-staffing company posted total revenues of $252 million, compared with $192 million last year.

Net income increased from $8.5 million to $9.5 million this year.

Quarterly earnings per share were 22 cents, compared with 20 cents last year.