Microsoft revenues rise, but warns on 2004


17 April 2003 Microsoft has reported revenues and profits for its fiscal third quarter, but offered a cautious outlook for the next year.

The software giant reported revenues of $7.84 billion, up 8% on the $7.25 billion achieved in the same quarter a year earlier. Net income weighed in at $2.79 billion, up 1.8% from the $2.74 billion reported in the same period last year.

Highlights of the quarter included strong sales of the Windows XP and Windows 2000 operating systems. However, The Xbox games console proved to be a continued drag on profitability and growth, with sales dropping dramatically in the quarter to $453 million from $778 million in the same period a year earlier — and by even more on a sequential basis.

Sales in the mobility division were also disappointing.

At the same time, the company also issued guidance for its fiscal 2004, which will run from 1 July. It suggested that revenues would rise by a relatively modest amount to between $33.1 billion and $33.8 billion.

“We are not planning to see a big up tick in demand,” chief financial officer John Connors told Reuters. He added: “From a macroeconomic standpoint, we are exiting a difficult year and entering one of uncertainty.”

However, many investors will take such comments with a pinch of salt. They are used to Microsoft talking down expectations with conservative forecasts, before surprising investors with more robust results.

Furthermore, Microsoft currently has an ambitious product roll-out schedule starting next week with the launch of Windows Server 2003, arguably the company’s biggest release in more than three years, as well as the Visual Studio 2003 software tools suite.

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Ben Rossi

Ben was Vitesse Media's editorial director, leading content creation and editorial strategy across all Vitesse products, including its market-leading B2B and consumer magazines, websites, research and...

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