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Microsoft Hints at Slowdown

January 18, 2001

SEATTLE (AP) _ Second-quarter profits at Microsoft Corp. rose 7 percent, meeting analysts’ lowered expectations, though the software giant said it will fall short of third-quarter forecasts.

Microsoft said Thursday it had net income of $2.62 billion, or 47 cents per share, on revenue of $6.59 billion for the quarter ended Dec. 31. For the same period last year, it reported profits of $2.44 billion, or 44 cents per share, on $6.11 billion in revenue.

Analysts surveyed by First Call/Thomson had expected second-quarter earnings of 47 cents per share, down from earlier estimates of 49 cents. Estimates were lowered after the Redmond, Wash.-based company warned in December that it expected earnings to be down 5 or 6 percent from earlier expectations.

Initial reaction by investors was positive, however, with Microsoft share prices jumping to $58.13 after finishing regular trading on the Nasdaq Stock Market at $55.63, up $2.69.

``Revenue came in a little higher than we had anticipated, so we were pleased with the performance to close the quarter,″ said Microsoft chief financial officer John Connors.

Microsoft, however, is retaining a cautious outlook on the near future, Connors said. The company reduced third-quarter expectations to 42 or 43 cents per share; analysts had been expecting 44 cents per share.

``The largest uncertainty is just the general state of the United States, and therefore the world economy and what that means for PC demand and technology spending in general,″ he said.

For the six months ended Dec. 31, Microsoft had profits of $4.83 billion or 87 cents per share on revenues of $12.39 billion. In the year-ago period, it earned $4.63 billion or 84 cents per share on revenues of $11.50 billion.


On the Web: http://www.microsoft.com

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