Microsoft Posts Strong Numbers Despite Two Sluggish Quarters

Profits at Microsoft Corp. were up 10 percent over a year ago despite flat sales, the company said Tuesday.

For the fourth quarter, which ended June 30, Microsoft made $2.4 billion, or 44 cents per share, on sales of $5.8 billion.

In the same period a year ago, Microsoft made $2.2 billion, or 40 cents per share, on sales of $5.76 billion.

Analysts who follow Microsoft had estimated net earnings of 42 cents per share.

Shares of Microsoft bumped a bit higher in after-hours trading after finishing the day on the Nasdaq Stock Market at $78.50, up 31.3 cents.

For the 1999-2000 fiscal year, Microsoft reported profits of $9.42 billion, or $1.70 per share, up 20 percent from 1998-99 profits of $7.79 billion, or $1.42 per share.

Despite two quarters of relatively flat sales, Microsoft’s total sales for the year were $22.96 billion, up 16 percent from last year’s $19.75 billion.

“This was a really solid year for us,” said John Connors, Microsoft’s chief financial officer. “I see a lot of momentum moving into 2001.”

Some of that momentum will come from sales of the new Windows 2000 operating system, which Connors said is “on track” with Microsoft’s projections. Connors said sales of the new system, which debuted Feb. 17, will continue to rise into 2001 and beyond.

In other reports Tuesday:

Apple Computer Inc. reported a 43 percent increase in third-quarter operating profits, beating Wall Street expectations by a penny a share.

Cashing in on a continuing shortage in computer chips, Intel Corp. reported second-quarter profits rose 79 percent, beating analysts’ expectations.

General Motors Corp. squeezed out a 1 percent increase in earnings for the second quarter, as a variety of higher costs in its automotive business offset growing revenues.

Philip Morris Cos.’ profit rose 7 percent in the second quarter, reflecting gains in cigarette sales domestically and abroad as well as growth in its Kraft Foods division. The results matched analyst expectations.

Second-quarter earnings at Johnson & Johnson Inc. rose 14 percent, helped by strong domestic pharmaceutical sales. The results surpassed analysts’ expectations

Sales and prices were up for office products and paper, respectively, but lumber prices were lower and office products costs rose as Boise Cascade Corp. posted second-quarter earnings down from a year earlier. The forest products giant reported net income of $31 million, or 46 cents per diluted share of common stock, for the three months that ended June 30. That was slightly better than Wall Street estimates but about 10 percent below second-quarter 1999 earnings of $34.4 million, or 52 cents per share.

Weyerhaeuser Co.’s second-quarter profits were up 24 percent from a year ago, despite an $82 million charge to settle a nationwide class-action lawsuit over allegedly defective hardboard siding.

Time Warner Inc., whose brands include CNN, Time magazine and Warner Brothers, reported net earnings of $75 million for the second quarter ending June 30, or 5 cents a share. That compared to $593 million or 43 cents a share in the same period a year ago. Revenue rose 8 percent to $7.08 billion from $6.53 billion.

Second-quarter net income at Honeywell International Inc. rose 14 percent, meeting analysts’ reduced expectations.

Continental Airlines said net income was up 13 percent from the year-ago period, easily beating expectations.

Southwest Airlines reported net income of $190.6 million, or 36 cents per share, a 21 percent jump from the $157.8 million, or 29 cents per share, recorded in the year-ago period. Analysts had expected 31 cents a share.

Wells Fargo & Co.’s secondquarter profits rose 12 percent. The results matched the consensus of analysts.

Shares of Unisys Corp. fell nearly 19 percent after the company said its second-quarter earnings declined to $56.3 million, less than half of what it was for the same period a year ago, and missed Wall Street’s revised expectations by a penny a share.

Second-quarter net losses at Internet advertising company DoubleClick Inc. quadrupled, though its operating losses narrowed as increased revenues from overseas clients offset turmoil among advertisers in the United States. For the three months ended June 30, the New York-based company that electronically inserts ad on Web sites reported a loss of $22.1 million, or 18 cents per share, compared with losses of $5.4 million, or 6 cents per share, in the year-ago period. The loss was two cents a share narrower than analysts expected.

Second-quarter earnings at brokerage Merrill Lynch & Co. rose 34 percent to $902 million, helped by strong underwriting revenue. The results beat analysts’ expectations.

RealNetworks Inc., earned $10.6 million, or 6 cents per share, compared with a loss of $500,000 in the same quarter a year ago. RealNetworks saw sales of $62.7 million, up 119 percent from $28.5 million a year ago. The results beat estimates by a penny a share.

Crown Pacific Partners reported second quarter income was $7 million or 23 cents per unit compared with $9.9 million or 32 cents per unit for the same quarter in 1999.

Lower lumber prices affected earnings, officials said. The Portland, Ore.-based company operates mills in Coeur d’Alene and Bonners Ferry.

This sidebar appeared with the story: ALSO TUESDAY Potlatch loss

Potlatch Corp. reported a second quarter loss of $7.4 million, or 25 cents per share. The loss reflects a $26 million pre-tax charge for costs associated with layoffs of salaried workers.

The layoffs, announced in June, will save the Spokane-based company about $21 million annually, according to company estimates.

Potlatch also said that second quarter improvements in earnings from pulp operations were offset by lower results for wood products.