Microsoft blows past earnings estimates

Microsoft Corporation announced net income of $2.19 billion on revenues of $5.38 billion for the quarter ending September 30, a healthy 37% increase over the same quarter a year before, when the company made $4.19 billion. The company attributed the gains to strong demand for personal computers. In fact, this is the first quarter in recent memory where the software giant didn't warn investors of possible problems in the future.

"We had a really big quarter driven by strong corporate demand for Office 2000, Windows NT Server and BackOffice applications," said Greg Maffei, CFO of Microsoft. "It does not appear that Y2K had a significant impact on results. During the quarter, we also saw excellent PC unit growth, particularly in Asia, and we expect that trend to continue in the December quarter."

Microsoft released the second release candidate of Windows 2000, RC2, to 750,000 testers during the quarter and expects to release the product to manufacturing by the end of 1999. In fact, Microsoft's mention of a late 1999 RTM date is interesting, giving all of the speculation in the press that Windows 2000 has somehow been delayed.

The most incredible news about Microsoft's quarterly results wasn't in the numbers, but in the mood of Greg Maffei, who has historically had little good to say about upcoming quarters. The normally reserved Maffei was almost exuberant in a conference call with reporters.

"There might be a little upside to next quarter above the current estimates," Maffei said. "\[Year 2000 is\] something that's manageable and not something that's going to have a dramatic impact on our business."

One-time gains for the company, which were not factored into the year-to-year growth estimates include the sale of Sidewalk ($156 million) and SoftImage ($160 million)

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