Microsoft Revenue Hits Record at $16.4B

Jan 25, 05:00 AM

SEATTLE -- What recession?

Microsoft on Thursday reported record quarterly revenue -- and a 79% pop in profits. And it raised its fiscal-year outlook, signaling a belief that tech spending will persist at a healthy clip.

"We're seeing strong growth internationally and decent growth in the U.S.," says Frank Brod, Microsoft's chief accounting officer.

Microsoft shares rose 5% in after-hours trading to $34.80.

For its fiscal second quarter, Microsoft reported revenue of $16.4 billion, a quarterly record, and net income of $4.7 billion, or 50 cents a share. That's up from revenue of $12.5 billion and net income of $2.6 billion, or 26 cents, the same period a year earlier

. It sold more than 100 million Vista licenses. Revenue in its entertainment unit, which includes Xbox, Windows Mobile and Zune, rose 3%.

Those strong results allowed the company to raise its outlook for the fiscal year, which ends June 30. Microsoft said it now expects earnings of $1.85 to $1.88 a share for the year, and revenue of $59.9 billion to $60.5 billion. Analysts had previously estimated $1.81 a share and revenue of $59.36 billion for 2008.

"If you look at earnings from IBM, Microsoft and other big tech (supplier) companies, most of them seem to have OK numbers and OK outlooks," says Sid Parakh, tech stocks analyst at McAdams Wright Ragen. "That bodes well, at least from a tech-spending perspective."

Meanwhile, Microsoft Chairman Bill Gates called for a new "creative capitalism" to help the world's poorest people. At the World Economic Forum in Davos, Switzerland, Gates urged business leaders and politicians "to find a way to make the aspects of capitalism that serve wealthier people serve poorer people as well." Gates said he wants to see the benefits of science and technology reach the poor.

*Davos forum, 9A (c) Copyright 2005 USA TODAY, a division of Gannett Co. Inc. Microsoft Revenue Hits Record at $16.4B
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