Microsoft shares jump on outlook
Published: 12 Jul 2001 09:47 BST
Microsoft on Wednesday said it would report better-than-expected sales for the fourth quarter, but added it would log an investment loss of $2.6bn (about £2bn).
Additionally, the software giant said earnings from operations would be in line with its previous forecast excluding one-time items. First Call consensus predicts a profit of 42 cents a share, excluding charges. Including charges, Microsoft expects to report a profit of a penny per share.
Shares of Microsoft rose to $70.57 in after-hours activity on the Island ECN following the announcement. Microsoft gained $2.02 to $66.50 in Wednesday's regular trading ahead of the news.
Microsoft expects revenue for the quarter to range from $6.5bn to $6.6bn, higher than its previous estimate of $6.3bn to $6.5bn. Wall Street analysts expected Microsoft to report revenue of $6.46bn, according to First Call.
Microsoft plans to report an investment loss of $2.6bn for the fourth quarter, stemming from a one-time charge of $3.9bn. The company said the charge reflects a drop in the value of its stock portfolio, especially in cable and telecommunications issues.
Some Wall Street analysts have been cautious about the immediate future for Microsoft, especially because its stock price is up more than 25 percent since late March, although shares have fallen in recent days.
"While we believe that Microsoft could beat consensus earnings per share by 1 cent (in the fourth quarter), we do not see near-term price catalysts," Pacific Crest Securities analyst Brendan Barnicle wrote this week.
Earlier Wednesday, Merrill Lynch analyst Henry Blodget lowered his profit estimates for Microsoft, citing a slower-than-expected market for PCs and soft demand for enterprise software. Blodget cut his revenue forecast for Microsoft's June quarter to $6.3bn from $6.5bn.
But other analysts believe Microsoft looks stronger than ever, especially with the likelihood of an out-of-court settlement in the antitrust case against the company.
Microsoft is scheduled to report complete fourth-quarter results 19 July.
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