Microsoft Corp started out fiscal 2000 on a strong note, delivering another quarter of solid growth and earnings that exceeded expectations. The software giant reported first-quarter net income that rose 30.2% year-over-year to $2.19bn. Revenue for the quarter saw a 22% increase to $5.38bn, mostly buoyed by better-than-expected PC shipments. On a per-share basis, earnings […]
Microsoft Corp started out fiscal 2000 on a strong note, delivering another quarter of solid growth and earnings that exceeded expectations. The software giant reported first-quarter net income that rose 30.2% year-over-year to $2.19bn. Revenue for the quarter saw a 22% increase to $5.38bn, mostly buoyed by better-than-expected PC shipments. On a per-share basis, earnings were $0.40, up from $0.31 a year ago. Excluding one-time gains from the sale of businesses of $156m and $160m in the quarter and year-ago quarter, respectively, net income rose 37% and amounted to earnings of $0.38, easily beating the First Call consensus of $0.34.
The company said it saw significant revenue growth across all of its product lines. Windows platform revenues rose 17.2% to $2.25bn from 1.92bn in the year-ago quarter, while sales of productivity applications and developer tools jumped 40.3% to $2.45bn. Revenue from consumer, commerce and other areas rose 29.7% to $685m. The one-time gain in the quarter came as the result of the sale of the entertainment city guide portion of the MSN Sidewalk property and the year-ago gain came from the sale of the Softimage subsidiary.
From a channel standpoint, OEM revenues rose 27.4% to $1.74bn, mostly due to higher PC shipments and increased penetration of Windows NT Workstation and Office 2000. The South Pacific and Americas region saw sales up 16.2% at $1.87bn and sales in Asia soared 82.5% to $593m. Revenues from Europe, the Middle East and Africa amounted to $1.18bn, up 32.3% year-over-year. On the balance sheet, the company finished the quarter with cash and equivalents of $18.9bn, up from $17.24bn on June 30. Unearned revenue also jumped to roughly $4.1bn from $3.1bn a year ago.
Chief financial officer Greg Maffei expressed his pleasure with the results, calling them awesome in the face of Y2K and the upcoming launch of Windows 2000. It does not appear that Y2K had a significant impact on results, Maffei said, adding that he liked the shape of the quarter, with solid gains recorded in Europe and Japan. Looking ahead to the second quarter, Maffei actually sees a possible upside from Y2K as companies which have finished their work in the area could return to normal spending patterns.
Seasonal increases in PC shipments, rising Office 2000 sales and year-end IT spending should all add up to sequential sales growth of about $750m in the company’s second quarter, Maffei said. He also said that the current consensus earnings estimate of $0.39 is probably low by about $0.03. Adding his typical cautionary note, Maffei warned analysts not to expect an immediate revenue spike from Windows 2000, which is expected in the second half of Microsoft’s fiscal year. He said the company has no real visibility into the second half of the year and we’re encouraging conservatism.