SEATTLE — Strong sales of flagship products like Windows XP and the new Xbox game console helped Microsoft Corp. report strong second quarter revenue, but the company's earnings were hurt by costs related to its antitrust woes.
Shares in Microsoft were down $3 to $66.86 in early trading Friday on the Nasdaq Stock Market.
Brendan Barnicle, an analyst with Pacific Crest Securities, said Wall Street might have been hoping Microsoft would revise its earnings expectations upward and was disappointed to see guidance remain the same.
Microsoft Chief Financial Officer John Connors said that guidance for the full fiscal year would remain about the same although the company exceeded expectations in the second quarter ended Dec. 31.
In a conference call to analysts and journalists, he also cautioned that the company was still being hurt by sluggish PC sales and the general downturn in the global economy, particularly in Asia.
"I think the Street is trying to wrestle with what appeared to be a very strong quarter with what appears to be a diminutive look at the third quarter and fourth quarter," said Scott McAdams, an analyst and president of McAdams Wright Ragen in Seattle.
Despite the after-hours jitters, analysts said they were generally happy with the company's performance.
James Moore of Deutsche Bank Alex. Brown said the company looked "as strong as ever" and appears to be weathering the economic downturn well.
"I think they're in very good shape," Moore said. "They're positioned extremely well."
Analysts also cautioned that the famously conservative company may well beat its own expectations.
The Redmond, Wash., software giant reported a 13 percent drop in net income for its second quarter after market close Thursday, largely due to a hefty one-time charge for antitrust lawsuit expenses, but revenues rose 18 percent over the same period last year.
For the quarter ended Dec. 31, Microsoft reported profits of $2.28 billion, or 41 cents per share, compared with net income of $2.62 billion, or 47 cents per share, in the same period last year.
The earnings included a one-time charge of $660 million, or about 8 cents per share, for estimated expenses in connection with a consumer class-action lawsuit.