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Despite PC slowdown, Microsoft results nudge past expectations

Beast of Redmond making nearly $6.5 billion a quarter

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Microsoft has just nudged ahead of expectations in its Q3 results, pushing up the share price up by as much as 6.5 per cent.

The company reported revenues up 14 per cent (on Q3 last year) to $6.46 billion, against an expected $6.3 billion. Operating profits jumped 9.6 per cent to $3 billion.

The software giant said revenues would be higher than expected over the financial year but earnings for the year would be slightly lower. This goes against the prevailing view which held Microsoft would suffer from the slowdown in PC sales. Even CFO John Connors said they had done better than they thought.

It's all thanks to uptake of Windows 2000, according to Connors. That and "growing momentum" around the .NET next-generation vision. The first point may well be true, the second is simply showmanship.

Pre-tax profits grew by a smaller 1.2 per cent to $3.7 billion thanks a drop in investment income, but earnings per share were 44 cents, up from 43 cents last year and beating the expectation of 42 cents.

Connors confirmed that PC sales has fallen and put his prediction for the next quarter's revenues at expectation-level, although he said earnings per share would drop to 41 cents.

Profits will also be hit by the release of Xbox later this year, which Microsoft will sell at a loss to grab some market share and the marketing of upcoming Windows XP won't come cheap either.

As for its Internet presence, MSN now has five million access subscribers, according to the company, which puts it second in the world behind AOL.

The results come just a day after IBM also managed to nudge expectations. These results have put extra confidence in the two companies thanks to a recent collapse in most IT companies' finances. ®

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