Microsoft revises Outlook after robust profit in Q1

Microsoft Corp. on Thursday declared first quarter revenue of $10.81 billion for the period ended September 30, 2006, an 11% increase over the same quarter of the prior year. The company credited stronger sales of server software and some cost savings for the surging profit.

Redmond based software giant said it overall earned $3.48 billion or $0.35 per share in the quarter compared with $3.14 billion or $0.29 a share on revenue of $9.74bn in the same period a year ago. The previous year profit figure includes a $0.02 per share charge for certain legal charges.

Microsoft said that it’s recently rolled out products including the Xbox 360 and SQL Server boosted the profits and sales.

Earlier in June, Microsoft had said that it expects revenue in the range of $10.6bn and $10.8bn, with per-share profits between 30 cents and 32 cents. And, in a poll carried out by Thomson Financial, analysts predicted earnings of 31 cents a share on revenue of $10.75 billion.

In a statement, chief financial officer Chris Liddell said, “The solid revenue results for the quarter were at the top end of our expectations and represent a very good start to the fiscal year.”

Liddell also said company’s gross income was amplified by higher-than-expected investment income. He said Microsoft also was able to reduce spending in the recently ended three months of period, but he warned that some of the savings would be disbursed in the current quarter instead, on marketing and other efforts.

For the fiscal second quarter ending December 31, 2006, Microsoft said it expects revenue of $11.8bn to $12.4bn and per-share earnings of $0.22 to $0.24. The company said the results would be about 11 cents less than it might have been because it expected to defer about $1.5 billion in revenue.

The company wants to defer the revenue to account for a coupon programme in which buyers of Office and Windows this holiday season will be able to upgrade to advanced versions-Office 2007 and Windows Vista- at reduced cost when those products are released early next year.

For the full fiscal year ending in June 2007, Microsoft expects revenue in the range of $50bn to $50.9bn and per-share earnings in the range of $1.43 to $1.46, a minor revision to a previous forecast of $1.43 to $1.47. The expected figure of revenue for the 12-month period is also slightly higher than a previous forecast of $49.7 billion to $50.7 billion.

Now Microsoft is fully attentive on Vista and the latest version of Office, which are due for release to consumers in the New Year. “As we look to the upcoming releases of Windows Vista, the 2007 Microsoft Office system and Exchange Server 2007, we are excited about these products and believe they will deliver unprecedented levels of business value to our customers,” Kevin Turner, chief operating officer at Microsoft said.

Shares of Microsoft surged 4 cents to $28.35 during the regular session in NASDAQ on Thursday and rose to $28.50 in after hours trading.