Surprisingly good quarterly results send Microsoft share price rocketing
It’s not been a bad week for Microsoft. Thursday saw the release of Windows 7, and Friday saw the company announce its quarterly results. Although not fantastic, they are better than expected and the market reacted positively, with Microsoft shares rising by 9 percent at one stage of the trading day.
Microsoft was expected to announce very poor results for the last quarter. But it actually turned out much better than most analysts were anticipating.
In the three months to September, profits fell from $4.37 billion in 2008 to $3.57 billion in 2009. This equates to 40 cents per share, which is much better than Wall Street forecasts of 32 cents per share.
In the three months to September, revenue fell 14 percent to $12.93 billion. This beat the average forecast by analysts of $12.31 billion. And that’s with Microsoft deferring revenue of half of all Vista sales in this period to allow for the free Windows 7 upgrade program. No Windows 7 pre-sales were included in these results either, meaning the next quarter should look even healthier for the company.
Brendan Barnicle of Pacific Crest Securities told Reuters:
You are seeing some of the benefit of the improvement in PCs that we have heard about. This is a trend. They’ve got some good momentum behind them and it’s just going to get accelerated now that you have Windows 7 out in the market.
When the better-than-expected results were announced Microsoft shares shot up early to a 52-week high of $29.35. They then settled during afternoon trading to $27.88, still an increase of almost 5 percent or $1.29 overall. Since hitting a 10-year low in March of this year, Microsoft shares have bounced back, rising 92 percent in the space of seven months.
So the figures may not have been brilliant but they were much better than expected. And that had the effect of encouraging people to buy rather than sell, with a sense that Microsoft is on its way back at last. Windows 7 going on general release a day earlier surely also helped foster this positivity in the company, as a new operating system (if done well) means a lot of potential new revenue and profit for the company.
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