Microsoft earnings hit the mark

The software maker delivers roughly what was expected in its quarterly earnings forecast, but those hoping for a blowout are likely to be disappointed.

Updated 2:02 PM PDT to reflect after-hours trading of Microsoft stock.

Microsoft on Thursday reported quarterly earnings that edged past analysts' estimates, but revenue came in slightly below what some analysts had been expecting. On the plus side, the company's profit forecast for next year is higher than some analysts were projecting.

The software maker reported earnings of 47 cents per share, on revenue of $14.45 billion, for the three months ended March 31. That compares to analysts' estimates of 44 cents per share, on revenue of $14.5 billion, according to Thomson Reuters. The results include a tax benefit and a charge for a European Union fine that essentially offset one another.

Microsoft graphic

"Our third-quarter results demonstrate the benefit of our diversified business model," Microsoft CFO Chris Liddell said in a statement. "Our broad span across geographies, product categories and customer segments is a tremendous asset and supports our outlook for double-digit revenue, operating income and earnings per share growth for this fiscal year and also for fiscal year 2009."

For the current quarter, Microsoft said to expect earnings of 45 cents to 48 cents per share on revenue of $15.5 billion to $15.8 billion. Analysts were looking for a forecast of 48 cents per share, on revenue of $15.55 billion, according to Thomson Reuters.

In early after-hours trading, Microsoft shares were off more than 5 percent, at $30.15.

The company also issued its preliminary forecast for fiscal 2009, estimating per-share earnings of between $2.13 and $2.19, on total revenue of $66.9 billion to $68.0 billion. Those figures are somewhat ahead of analysts' forecasts.

In addition, Microsoft filed its quarterly report Thursday with the SEC. Among the tidbits that stood out to me, the company saw its personnel-related expenses increase 14 percent in the quarter, as Microsoft has grown its staff 13 percent over the past year and boosted salaries for existing workers.

In the report, Microsoft also noted that it sees PC unit shipments growing 11 percent to 13 percent worldwide this year, with stronger growth continuing to come from emerging markets.

Microsoft got a big boost in the quarter from the weaker dollar. Exchange rates boosted revenue by $400 million during the three-month period, Microsoft said in the SEC filing.

The company shipped 1.3 million Xbox 360 consoles in the quarter, higher than first anticipated, but in line with expectations following recent sales figures from NPD. The company also put a price tag on its Danger acquisition, saying it paid $500 million in cash for the consumer smartphone maker.

One other thing that affected Microsoft in the quarter was an uptick in the piracy rate, particularly in Asia. It will bear watching to see if this is a one quarter blip or if Microsoft will struggle to continue the gains it has been making in recent quarters.

Microsoft will host a quarterly conference call with investors at 2:30 p.m. PT, which I'll be covering live.

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