Microsoft Gets Richer Despite Economic Climate

"The sales force executed well," Microsoft CFO John Connors told Wall Street analysts on Thursday, after the company reported a blockbuster fiscal profit of $2.73 billion, or 50 cents per share. "We had a truly unique quarter."

The latest profit reflects a huge jump compared with the $1.28 billion, or 23 cents per share, that Microsoft reported for the same quarter last year.

Wall Street analysts expected earnings-per-share to come in roughly at 43 cents; the highest estimate was 46 cents. For the December quarter, Connors is estimating earnings per share to come in at between 45 cents and 46 cents and between $1.89 and $1.95 per share for the year.

Executives said that what cranked up the Microsoft money-making machine for the quarter ended Sept. 30 was a massive wave of multiyear Licensing 6.0 deals that came in close to the July 31 deadline, which coincided with the beginning of the company's quarter.

Connors reiterated during a conference call with analysts and reporters that the high level of revenue attained from multiyear licensing and upgrade advantage contracts last quarter won't be duplicated again.

He also noted that the company is gearing up its sales force and partners for the tougher sell in the next few quarters.

"We expect customer purchasing behavior to return to normal licensing levels," Connors said. "The growth after this quarter will be modest. The [upgrade advantage spiked in this quarter so the sales force will have to work extra hard through the next fiscal quarters."

Connors said Microsoft will rely more heavily on partners to sell into small- and midsize businesses.

"We're adding resources to our sales and partner-led sales efforts," he said. "The sales cycle is longer in this business and while corporate wallets are not closed, they're gripped pretty tight."

Earlier in the call, Microsoft Corporate Controller Scott Boggs provided an update on Bill Gates' ever-growing pot of gold. As of Sept. 30, 2001, Microsoft counted $70 billion in assets, $53.5 in stockholder value, $40 billion in cash and $9.1 billion in unearned revenue, cash in the bank from licensing transactions that will be paid out to Microsoft over a period of years.