Microsoft said last night its quarterly earnings rose 81 per cent but forecast weaker-than-expected profit in the current business year.
The world's largest software maker said slightly slower personal computer sales growth, projected at 7 per cent to 9 per cent in the year to June 2005, would also make it difficult to match its 14 per cent revenue growth in fiscal 2004 since PC sales drive sales of its Windows operating system.
Mr John Connors Microsoft chief financial officer
"We think the 7 to 9 per cent growth is quite respectable, given the strength of fiscal (2004), and the resulting tough comparables," Microsoft chief financial officer Mr John Connors said.
Mr Connors also cautioned that Microsoft's overseas sales were unlikely to be boosted this year by the effects of a weaker dollar, as they had been in the past year.
Spooked by the company's outlook for the current quarter and fiscal year, investors sold shares in Microsoft in after-hours trade. The stock fell as much as 5 per cent, but recovered to trade down 2 per cent from the Nasdaq close of $29.
At $28.35, Microsoft shares are back to where they were on Tuesday before the company announced a plan to distribute $75 billion in cash over the next four years.
The payout would hurt Microsoft's investment income as it moves its cash, which stood at $60.6 billion at the end of the latest quarter, into short-term investments to prepare for the payout, said Mr Connors.