Strong sales of its Office 97 business software propelled Microsoft Corp. to its first billion-dollar quarterly profit, trampling Wall Street's expectations and boosting the company's stock.
"We had an unusually great quarter," chief financial officer Mike Brown said Thursday after Microsoft reported its fiscal third-quarter earnings leaped 85 percent. "A sizzler."Many had expected a rise of about 45 percent. But Microsoft earned $1.04 billion, or 79 cents a share, in the quarter ended March 31, up from $562 million, or 44 cents a share, in the same period last year.
Revenues for the quarter were $3.21 billion, up 45.5 percent from $2.21 billion a year ago.
In after-hours trading Thursday, Microsoft gained nearly $5 per share to trade at $103. The profit news was announced after Microsoft stock closed at $98.121/2 on the Nasdaq Stock Market.
"Worldwide acceptance of Microsoft Office 97 ignited these outstanding results," Brown said, noting Microsoft also made solid gains in selling software to computer manufacturers because of the continued popularity of its Windows family of operating systems.
Richard Fade, vice president of Microsoft's desktop applications division, said Microsoft has sold more than 8 million licenses for Office 97 since its introduction in January. That's three times the rate of any previous version, Fade said, adding that more than 700 of the country's biggest companies are already using the software or actively considering it.
The best-selling package of business software includes the Microsoft Word word processor, Excel spreadsheet and Access database, along with other programs.
Operating systems such as Windows 95 and Windows NT also continued to do well in the March quarter, bringing in $1.7 billion in revenue, up 73 percent from a year earlier.
Profits for the first nine months of the fiscal year were $2.4 billion, or $1.83 a share, on revenues of $8.18 billion, up from $1.64 billion, or $1.28 a share, on revenues of $6.42 billion a year earlier.
As is the company's habit, executives sought to downplay expectations for upcoming results.
"I am a raging bull about Microsoft's long-term financial prospects," Brown said in a conference call with analysts. But he said it's part of his job "to remind you to be realistic about our expectations."
But analyst Rob Owens of Pacific Crest Securities said Microsoft "has the most defendable position of any software company and the outlook isn't for anything that's going to change that in the short term."