Microsoft makes progress on many fronts
BusinessWeek | at | by Mike
Despite the drubbing in technology stocks over the past three years -- the recent rally notwithstanding -- and the oft-delayed hopes for a recovery in information technology spending, Microsoft is the sector's one company that has steadily moved ahead, in our view. It wrapped up its fourth quarter of fiscal year 2003 (ended June 30) with a solid 11% growth in revenues and about 10% earnings growth, excluding one-time charges.
Revenues of $8.07 billion were better than our estimate of $7.91 billion. However, operating earnings per share of 23 cents was 1 cent below our estimate of 24 cents, mainly due to higher-than-expected marketing costs for upcoming products. Another drag on operating earnings: Microsoft settled its lawsuit with AOL Time Warner, which resulted in an aftertax charge of 5 cents per share, resulting in reported EPS of 18 cents. Nevertheless, we at S&P increased our fiscal year 2004 operating EPS estimate to $1.10, from $1.06, following this earnings release (like BusinessWeek and BusinessWeek Online, Standard & Poor's is a division of the McGraw-Hill Companies.)