Microsoft Profit Beats Estimates After Cost Cuts (Update1)
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By Dina Bass
Oct. 23 (Bloomberg) -- Microsoft Corp., the world’s largest software maker, posted a smaller drop in profit than analysts estimated after slashing costs to make up for falling sales. The stock rose as much as 10 percent in early trading.
First-quarter net income fell to $3.57 billion, or 40 cents a share, beating the 32-cent average estimate of analysts surveyed by Bloomberg. Revenue, excluding $1.47 billion deferred to a future quarter, was $12.9 billion, Microsoft said today in a statement.
Operating costs fell 6.9 percent after Microsoft made its first companywide firings, slashed travel costs and cut the rates it pays vendors to cope with slower spending by business customers. Demand from consumers helped sales of Windows for personal computers and the Xbox to exceed the estimates of Goldman Sachs Group Inc. analyst Sarah Friar.
“They can’t manage revenue, but they can manage the bottom line,” said Sid Parakh, an analyst at McAdams Wright Ragen in Seattle. “They’ve been pretty good about costs in the quarter. Everybody is more cautious on spending.”
Analysts had projected sales of $12.4 billion for the period ended Sept. 30. A year earlier, net income was $4.37 billion, or 48 cents a share, on sales of $15.1 billion.
Microsoft, which stopped giving earnings forecasts in January, didn’t provide a specific outlook for profit and sales. Microsoft said it will spend as much as $26.5 billion on operating costs in the year ending June 30, down from a previous forecast for as much as $26.9 billion.
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