Microsoft tops its earnings expectations

Amid strong PC demand from consumers and businesses, Microsoft on Thursday reported quarterly revenue and earnings that topped the company's expectations.

The Redmond, Wash.-based company said it earned $2.9 billion, or 27 cents per share, on revenue of $9.19 billion for the three months ended Sept. 30. That compares with earnings of $2.6 billion, or 24 cents per share, on revenue of $8.22 billion in the same quarter a year ago.

In July, Microsoft forecast revenue of $8.9 billion to $9 billion, with earnings per share of 25 cents, including about 5 cents per share in stock-based compensation expenses. Microsoft said Thursday that its per-share earnings included 5 cents worth of compensation-related charges.

"We've had a strong beginning to what we expect will be a very good year with continued growth in both our commercial and consumer businesses," Microsoft CFO John Connors said in a statement. "This quarter, we had a very healthy commercial server and desktop business driving double-digit revenue growth, and we expect to continue the trend of growing revenue faster than expenses as we work to make each of our businesses more efficient and profitable."

However, for the current quarter, which ends in December, Microsoft forecast revenue in the range of $10.3 billion to $10.5 billion. That's below the First Call consensus estimate of $10.7 billion. Microsoft said it expects earnings per share to be 28 cents, including stock-based compensation expenses.

The company did raise its expectations for the full fiscal year, which ends in June. Microsoft said it now expects revenue of between $38.9 billion and $39.2 billion, with per-share earnings of $1.07 and $1.09, including compensation charges. In July, Microsoft had predicted revenue of between $38.4 billion and $38.8 billion and earnings per share of between $1.05 and $1.08.

Microsoft ended the quarter with $64.4 billion in cash and short-term investments, compared with $60.6 billion at the end of June. However, the company expects that figure to drop because it has a one-time payout of $3 per share slated for later this year, pending shareholder approval of changes to compensate Microsoft employees for the payout.

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