Microsoft reported a 13 per cent drop in net income for its second quarter last night, largely due to a hefty one-time charge for antitrust lawsuit expenses, but revenues rose 18 per cent on the strength of new products.
For the quarter ended December 31st, Microsoft reported profits of $2.28 billion compared with net income of $2.62 billion in the same period last year.
The earnings included a one-time charge of $660 million for estimated expenses in connection with a consumer class-action lawsuit.
Wall Street initially appeared unimpressed. Shares in Microsoft were up $1.99 to end the day at $69.86 in trading on the Nasdaq stock market but fell sharply, by $1.52 to $68.34, in after-hours trading.
However, both analysts cautioned that Microsoft is famously conservative and may well beat its own expectations.
Although a Baltimore judge threw out the proposed settlement, Microsoft Chief Financial Officer Mr John Connors said in an interview yesterday that the company was still required to take that charge under accounting rules, if there is a possibility a revised settlement could be reached.
Microsoft had revenue of $7.74 billion, compared to $6.55 billion a year earlier. Those results handily beat Microsoft's earlier revenue expectations for the quarter.
The results were largely driven by Microsoft's new operating system, Windows XP which he said is selling at the rate of two copies per second and Xbox, the game console launched in November.
Although Xbox contributed to Microsoft's revenue stream, the product is not expected to be profitable for some time.