Microsoft Corp NI double, revenue fell

Microsoft Corp saw its net income nearly double from a year ago, but revenue fell short of Wall Street forecasts due to leaner licensing business and a sharp drop in the U.S. dollar’s value.

For the quarter ending March 31, the Redmond, Wash.-based company earned $2.56 billion US, or 23 cents per share, up from $1.32 billion, or 12 cents per share, a year ago.

Microsoft’s latest quarter included stock-compensation expenses and a charge of $768 million, or five cents a share, related to legal expenses, while the year-earlier period had $2.53 billion, or 17 cents a share, in legal charges.

Looking ahead to the fiscal fourth quarter. Microsoft forecast earnings of 27 cents to 28 cents a share, including stock-based compensation charges, on revenue of $10.1 billion to $10.2 billion. The First Call estimates were for earnings of 31 cents a share on revenue of $10.07 billion.

The company also offered an eagerly awaited outlook for the coming fiscal year, predicting earnings of $1.26 to $1.30 a share, including stock-based compensation charges, for the year starting July 1 on revenue of $43.3 billion to $44.1 billion. The First Call estimates were for earnings of $1.41 a share on revenue of $43.4 billion.

Revenue rose five per cent, from $9.18 billion to $9.62 billion, short of analysts’ estimates.

Microsoft blamed the shortfall primarily on a greater-than-expected decline in commercial and retail licensing for Windows and an unfavourable exchange rate in the past few months.

The company’s server and tools unit posted a profit of $824 million on revenue of $2.44 billion, up about 33 per cent from earnings of $616 million on revenue of $2.2 billion in the year-ago period.

The Windows and Office software divisions, the company’s two cash cows, showed more modest gains - a cause for concern among some analysts.

Profits on Windows were $2.34 billion on sales of $2.99 billion, up about 3 per cent from the year-ago period. Earnings in the Office division were $2 billion on sales of $2.77 billion, up 2.5 per cent from third-quarter 2004.

Microsoft, which is looking to sales of Xbox and other digital entertainment products to help offset tepid demand for its Windows operating system, issued a 2006 sales forecast that called for top-line growth of about 10%.