Microsoft cites strong sales of its Windows 95, Windows NT Server and BackOffice software in reporting a 22% jump in first-quarter earnings to US$614 million.
Revenue for the quarter that ended September 30 was US$2.3 billion, up 14% from US$2.02 billion a year ago. Earnings for the same quarter last year were US$499 million.
"They have certainly been able to show strength in desktop applications," says Rob Enderle, an analyst at Giga Information Group in Santa Clara, California. "A lot of fairly large and expensive Exchange deployments have gone in, and coupled with Windows NT Server, they're moving strongly toward minimal competition in the server space and virtually no competition on the desktop," he says.
With the coming Christmas holiday buying season and new products on the way, Microsoft's prospects continue to look bright. "There are a few things on the horizon that should allow them to show another spike in the next three or six months," Enderle says. "They've been absorbing costs on Normandy, but haven't generated any revenue yet because it's not on the market." Normandy is the code name for Microsoft's pending enterprise Internet software.
Companies are also waiting for release 4.5 of Exchange, the first service pack for Windows NT 4.0 and the recently announced version of Windows for handheld devices, Enderle says. In addition, "they've got some fairly stellar entertainment titles for the Christmas season, as well as the best digital game pad on the market," he says.
This was the first quarter that Microsoft sold more 32-bit applications than 16-bit applications, according to Greg Maffei, vice-president of corporate development and treasurer. Other highlights for the quarter included the release of the Publisher 97 Web authoring tool in 11 languages, the launch of MSNBC, the shipping of Internet Explorer 3.0 and the recent beta release of Unix and Windows 3.1 versions, he says.
Microsoft will continue pumping money into new and upgraded products with plans to spend US$2.1 billion in fiscal 1997, chief financial officer Mike Brown says. The company expects revenues to pick up in December and again in March, he says.
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