Microsoft Thursday posted stronger-than-expected fiscal Q3 sales of its Vista operating system and Office software and has presented optimistic guidance for the upcoming fiscal year, prompting a gain of almost 5% for the company's shares in AH trading. Net income was up 65% to $4.9 billion in the quarter ($0.50/share) against expectations of $0.46. Revenue was up 32% from a year ago to $14.4 billion, about $500 million ahead of Street forecasts. The figures were helped by a $1.7 billion carryover from last quarter related to guarantees the company had provided consumers to enable them to upgrade to Vista. Sales of Vista came in $300-400 million ahead of company expectations while its new Office 2007 suite came in $200 million ahead. Microsoft is projecting revenues for the next fiscal year of $56.5-57.5 billion, above analyst expectations of $56.2b. EPS are forecast to reach $1.68-1.72, roughly in line with expectations.
Sources: Microsoft Earnings Call Transcript F3Q07, Bloomberg, MSNBC, Wall Street Journal (I, II)
Commentary: Microsoft Beats Estimates, Stock Up After Hours • Oak Value Fund: The Long Case For Microsoft
Stocks/ETFs to watch: Microsoft Corp. (MSFT). Competitors: Google, Inc. (GOOG), Oracle Corp. (ORCL), Novell Inc. (NOVL), International Business Machines Corp. (IBM). ETFs: iShares Goldman Sachs Software Index Fund (IGV), Software HOLDRS Trust ETF (SWH), PowerShares Dynamic Software (PSJ)
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