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Microsoft's telco write-offs reduce net income by 42 per cent

But things don't look bad in general

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Microsoft's has announced a 42 per cent fall in net income this quarter, thanks entirely to a hefty $1.24 billion write-off over its cable and telco investments.

One can perhaps sense the ghost of former CFO Greg Maffei moaning and clanking his chains through the portfolio. Greg it was who, around two years ago, circled the globe pressing money (frequently in $5 billion-sized packages) into the hands of cable and telecoms operators.

Revenues were up 6 per cent over a year ago to $6.13 billion, defying the general IT industry trend and beating analyst expectations - hence its share price has gone up 2 per cent. Operating profits rose 4.3 per cent to $2.89 billion.

Microsoft's CFO John Connors said: "This has been a challenging period for us on many fronts. But we were happy to see our results meet, and in some cases, exceed expectations."

He went on to give optimistic estimates of future quarters but then this is hardly surprising since Windows XP is due to laucnh next week and the Xbox games console is expected in November. To do anything but say the future was rosy (while accepting that there was a general PC slowdown) would have been madness.

It does seem however that Microsoft is excellent at weathering the storm. ®

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