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Strong earnings expected for Microsoft

The software behemoth is expected to report strong quarterly earnings today, following ally Intel.

Software giant Microsoft will likely find solace in financial results from another expected strong quarter to be announced today, even as antitrust woes continue to weigh heavily on the high-flying firm.

Microsoft today is expected to announce earnings of 59 cents per share for its fiscal 1999 second quarter, according to consensus Wall Street estimates compiled by First Call. The expected results are up more than 40 percent from the 42 cents per share posted in the same period last year.

Several analysts said they expected Microsoft to beat the consensus figure by at least a penny or two.

Revenues are projected to rise 20 percent to 25 percent for the quarter to about $4.4 billion, analysts said.

"It?s a juggernaut, there isn?t much going wrong," said Michael Stanek, analyst with investment firm Lehman Brothers. "Retail was strong across the board and retail always drives the December quarter. Also, Europe is humming."

A key indicator for Microsoft remains the relative prosperity of the PC industry and its primary chip provider, Intel. The microprocessor behemoth beat estimates last week for its most recent quarter.

Most analysts expect Microsoft?s stock to continue to perform well ahead of the anticipated spring launch of Office 2000, the latest version of the company's top-selling set of desktop applications.

Microsoft?s skyrocketing profits offer a stark contrast amid the ongoing anti-trust trial in Washington D.C.

But analysts also say Microsoft should have a better chance to control the tone of the ongoing antitrust case against it now that it has begun to present its defense.

"We're probably going to hear a little more positive news from the trial," said Bill Epifanio, analyst with brokerage J.P. Morgan and Company.

Epifanio also said Microsoft stock was likely to split if it rises a bit more to the $155 or $160 area. Lehman Brothers has set a 52-week price target of $185 per share.

Going forward, analysts expect growth to slow slightly for the firm due to a lack of new products in the next four quarters. Goldman Sachs predicts revenue and earnings growth of 15 to 20 percent over the next year.

Much of the company?s future hinges on the release of the next version of the company?s Windows NT operating system software for corporations, now called Windows 2000, which has been fraught with delays. Even current expectations for a final test version of the software by April of this year may be optimistic.

Right now, analysts say it is continued strong sales of Windows 98 that is driving Microsoft?s business.

Reuters contributed to this report.