Microsoft, IBM Profits Soar

By: John Lester
Staff Writer
Published: Jul 19, 2008

While the economy is sagging, technology giants Microsoft and IBM reported double-digit growth in quarterly revenue and profits.

Microsoft Corp's net income for its fiscal fourth-quarter rose 42 percent to 4.3 billion, or 46 cents a share. Revenue climbed 18 to 15.8 billion.

For Microsoft's full fiscal year, the company's net income rose 26 to 17.7 billion, or 1.87 a share. Revenue for the year surged at 18 to 60.4 billion.

"Diversification of our businesses positions us well to weather the economic turmoil," said Frank Brod, Microsoft's chief accounting officer.

However, the software giant was lacking Wall Street's expectations sending Microsoft shares down 6 percent in after-hours trading. In regular trading, it had closed at 27.52, up 26 cents.

Microsoft's latest botched attempt to buy Yahoo to better compete against Google brought didn't help matters. Most tech stock analysts said it was a distraction.

Microsoft also posted lower-than-expected guidance about the current summer quarter.

IBM beat nearly all forecasts and raised its estimates for what it expects to earn this year.

PC sales also saw double-digit growth while a weaker dollar helped boost sales and profits of Microsoft's flagship Windows computer operating system. However, the 838 million in revenue contributed by its online services group, which competes with Google, fell short of the company's earlier guidance suggesting it could top 900 million.

IBM surged past Wall Street expectations by posting net income of 2.8 billion, or 1.98 a share, in the second quarter. That's 16 cents a share higher than the average estimate of analysts polled by Thomson Reuters. Revenue rose almost 13 to 26.8 billion, as IBM's computing and consulting services thrived globally.

IBM's shares closed at 126.52, up 58 cents, and slipped to 126.12 in after-hours trading.