Microsoft Reports Strong Q3 Earnings

Showing resistance to the general slowdown in PC sales, Microsoft reported revenues of US$6.46 billion in the third quarter of fiscal 2001 (ending Mar. 31, 2001), a 14% increase over the same quarter last year. This is slightly ahead of analysts’ original expectations, which ranged between US$6.3 and US$6.4 billion, and well ahead of the US$6 billion estimates that some analysts released shortly before the announcement. Microsoft Chief Financial Officer John Connors credited the results to strong sales of Windows 2000 Professional and the company’s server applications.

Desktop Applications Reverse Negative Trend

Although revenues grew considerably compared with the same quarter last year, they dropped slightly from Q2’01’s all-time record of US$6.59 billion. This reflects a normal slowdown after the holiday buying season for consumers and year-end purchasing rush for businesses.

Desktop application sales-the largest component of the company’s revenues-rose 7% over the same quarter last year, in contrast to declines posted in the previous two quarters. (See the chart “Revenues by Product Line“.) This is partly attributable to unexpectedly high demand for Office licenses and Client Access Licenses for Exchange (which are included in this segment, rather than with enterprise servers).