Microsoft Reports Increased Profit

Microsoft announced Thursday that for the quarter ended June 30, it had profits of $1.53 billion, or 28 cents per share, compared with a profit of $65 million, or 1 cent a share, in the same period last year.

The most-recent earnings included an after-tax charge of $806 million in "investment impairments" stemming from investments made in AT&T and other telecommunications companies as part of Microsoft's bid to roll out software over cable networks and other initiatives. In the same quarter a year ago, Microsoft took an after-tax charge of $2.63 billion, or 47 cents a share, for investment impairments.

In fiscal years 2001 and 2002, Microsoft has taken $9 billion in investment impairment charges, mostly for telecom investments.

Microsoft had revenues of $7.25 billion for the quarter, a 10-percent increase from the $6.58 billion for the same period a year ago.

Analysts polled by Thomson Financial/First Call were expecting earnings of 42 cents per share for the quarter on revenues of $7.1 billion.

Microsoft stock closed Thursday at $51.11, down 89 cents a share on the Nasdaq stock market. In after-hours trading, shares were down 26 cents to $50.85.

Chief Financial Officer John Connors said in an interview that sales of the new Windows XP operating system and other desktop computer software remained strong. He said the company was able to increase its sales from corporate customers despite the overall slowing in technology spending.

Microsoft plans to add 5,000 employees to its roughly 50,000 work force, with 30 percent to 40 percent of the new hires in the Puget Sound region. The positions are for research and development, sales and support, Connors said.

Connors said the company currently has no plans to change the way it reports stock options as some are proposing as an accounting reform.

Microsoft said that sales of its new Xbox video game consoles reached 3.9 million for the fiscal year.

For the fiscal year, Microsoft had profits of $7.83 billion, or $1.41 a share, compared to $7.35 billion, or $1.32 a share, in 2001. Revenue for the year was $28.4 billion, up 12 percent from $25.3 billion the previous year.

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