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Microsoft earnings rise
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July 17, 1997: 5:29 p.m. ET
Software giant reports 86 percent increase in fourth-quarter income
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NEW YORK (CNNfn) - Microsoft Corp. Thursday reported its fourth-quarter profits rose 86 percent to $1.06 billion, or 80 cents a share, on strong sales of its Windows 95 operating system and Microsoft Office applications.
In the year-ago quarter, the company earned $559 million, or 43 cents a share.
Those results were in line with expectations. Analysts surveyed by the First Call Research Network had predicted earnings of 79 cents a share.
However, officials were quick to issue a cautionary note, saying revenue growth is expected to slow down next year.
Revenues for the quarter ended June 30 were $3.18 billion, a 41 percent increase over the year-ago period.
The Redmond, Wash.-based software giant said its fiscal year revenues climbed 31 percent to $11.36 billion. For the year, net income totaled $3.45 billion and earnings per share were $2.63, 54 percent higher than the $1.71 in fiscal 1996.
The announcement came after the close of trading. Microsoft shares moved up 1 to close at 149-7/16. However, in after hours trading, shares had slumped to 143-1/8.
"Microsoft completed another year of growth in both revenues and profits led by the success of Microsoft Windows 95 and Office applications," said Mike Brown, chief financial officer. "Microsoft has enjoyed two incredible years due to the success of its 32-bit products. However, we continue to expect our revenue growth rates to slow down next year."
Bob Herbold, chief operating officer, said the company's efforts to restrain costs helped boost profitability significantly during both the quarter and over the fiscal year.
"Cost of goods sold dropped significantly this year, primarily reflecting the continuing shift to lower-cost CD-ROMs from traditional disk media," he said.
Herbold said since Microsoft currently ships about 90 percent of its software on CD-ROMs, it's unlikely that the cost of goods sold will decline significantly.
Microsoft officials guided the company through a couple of notable acquisitions during the quarter such as a $1 billion investment in Comcast Corp., the nation's No. 4 cable company, and the $425 million purchase of WebTV Networks Inc.
--Cyrus Afzali
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Microsoft
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