Microsoft hit after earnings and forecast miss
Shares of Microsoft Corp. dropped more than 6% in after-hours trading after the software giant posted a fiscal fourth-quarter profit that fell short of Wall Street’s estimates as it forecast lower-than-expected revenue for the following quarter.Net income rose 42% from year ago results to $4.3 billion, or 46 cents per share. Analysts polled by Thomson Reuters were looking for a profit of 47 cents per share.
Sales rose 18% to $15.84 billion, beating analysts’ forecasts of $15.65 billion.
Looking ahead, Microsoft said fiscal-first quarter revenue would come in between $14.7 billion and $14.9 billion. Analysts were hoping for $15.06 billion.
The company’s XP operating system was upgraded in early 2007. But users have been slow to adopt the new Vista system.
“The Vista upgrade cycle is not providing the same growth that previous upgrade cycles have helped them,” said Richard Williams, senior software analyst at Cross Research.
Chris Liddell, chief financial officer of Microsoft, admitted tough economic headwinds in the months ahead. “Looking forward, despite difficult economic conditions, we will build upon the momentum exiting fiscal year 2008,” he said in a written statement.
But fears of a slowing economy are expected to pinch technology spending. “Economic weakness is hurting them,” said Williams.
Another analyst says that overall, Microsoft has actually been holding up well. “These results were really pretty solid,” said Peter Misek, global technology strategist for Canaccord Adams. “They have not seen this broad malaise that has hit Wall Street.”
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