Microsoft gains bode well for tech sector
Microsoft Corp. said Thursday that its net income surged in the most recent quarter, the latest sign that businesses are again spending money on technology.
Strong sales of Windows, particularly to Microsoft’s corporate customers, helped boost results in the fiscal fourth quarter. Microsoft said it has sold more than 175 million licenses of the newest version, Windows 7, since it went on sale last year.
Big businesses stopped replacing aging computers, servers and software during the worst of the recession. Last quarter, the software maker said it saw signs that its corporate customers were starting to spend again.
In other reports Thursday:
• Amazon.com Inc. said its second-quarter net income jumped, bolstered by shoppers who spent more with the online retailer even as consumer confidence fell overall. But the Seattle-based company’s earnings fell below analyst expectations, and its stock dove in after-hours trading. For the April-June quarter, Amazon.com earned $207 million, or 45 cents per share. That’s a 45 percent increase from $142 million, or 32 cents per share, in the same quarter last year. Analysts polled by Thomson Reuters were looking for 54 cents per share, but rising operating expenses cut into Amazon’s profit growth.
• Heavy machinery maker Caterpillar Inc. said stabilizing inventories at dealerships helped push its quarterly profits up 91 percent in the second quarter. The company said inventories were flat, compared with the sharp tumble they took in the year-ago quarter. That was when dealers cut way back on inventories in response to crumbling demand for Caterpillar machinery as the recession took hold.
• American Express Co. tripled its second-quarter profit as more spending by its card members helped vault its business back to pre-recession levels. The company registered its third consecutive quarterly gain since snapping a streak of eight straight quarters of falling profits dating to the start of the recession in late 2007. American Express earned $1.02 billion in the April-through-June quarter, or 84 cents per share, up from $337 million, or 9 cents per share, a year earlier. Revenue was $6.9 billion, up 13 percent from $6.1 billion. Analysts surveyed by Thomson Reuters were expecting earnings of 78 cents per share on sales of $6.8 billion.
• Rising product sales helped three big drugmakers – Bristol-Myers Squibb Co., Roche Holding AG and Eli Lilly and Co. – post better second-quarter results on Thursday. The three Top 20 pharmaceutical companies also confirmed or raised their 2010 profit forecasts, a move to reassure investors worried about the impact of the U.S. health care overhaul, the European economic crisis, shifting currency exchange rates and looming generic competition.
• KeyCorp reported its first quarterly profit in two years Thursday with fewer soured loans, more income from fees and better cost controls. The Cleveland banking company, which had been nagged by a flood of bad loans, said it earned $29 million, or 3 cents per share, in the second quarter. KeyCorp lost $390 million, or 68 cents per share, in the April-June quarter of 2009.
• Capital One says it posted a profit in the second quarter as fewer customers defaulted on credit card balances. For the three months ending June 30, the company earned $608 million, or $1.33 per share. That compared with a loss of $277 million, or 66 cents per share a year earlier. The year-ago results were affected by the company’s $462 million repayment of government bailout money.
• Railroad operator Union Pacific Corp. said its net income jumped 53 percent in the second quarter due largely to a big increase in revenue. The company said all six of its freight businesses grew – the first time that’s happened in six years.
• A thawing market for auto loans helped customers buy more cars and trucks in the second quarter, lifting AutoNation’s net income by nearly 30 percent, the country’s largest dealership chain said. The company, which owns 249 dealership franchises in 15 states, said new cars are selling for about $1,000 more on average than they did at the same time last year.
• Safeway’s second-quarter revenue rose only slightly, the national grocery chain reported. Sales at stores open at least a year – considered a key indicator of a retailer’s health because it excludes results from stores that opened or closed during the year – actually slipped as Safeway faced tough price competition, some from new quarters.
• Insurer Travelers Cos. said its second-quarter profit dipped 9 percent because of a jump in claims paid to cover weather-related losses. The St. Paul, Minn., company, which is a component of the Dow Jones industrial average, also cut the upper end of its full-year earnings outlook because of the weak economy.
• 3M Co., which makes everything from Post-its to films for flat-screen TVs, said it’s optimistic about the pace of the global economic recovery and raised its full-year outlook on Thursday. 3M, considered an economic bellwether because of its broad base of products, also said net income rose 43 percent for the quarter ended in June. 3M shares, which are a Dow component, rose $2.63, or 3.2 percent, to $84.93 in midday trading. Its positive outlook, along with rosy forecasts from UPS, AT&T and Caterpillar, helped boost the stock market.