‘What Tech Slump?’ Asks Microsoft as Profits Double

21 October 2002

The downturn afflicting the technology sector seems to have bypassed America’s other Big M, judging by results posted by Microsoft for its fiscal first quarter.

Net income at the software behemoth jumped to $2.73 billion (€2.81bn; £1.76bn), more than double the $1.28bn for Q1 2001. Over the same period, revenues leaped 26% to $7.75bn.

Much of the sales boost came from licensing agreements forged with business customers allowing multi-year upgrades. Such deals produce revenue over the life of the contract, allowing Microsoft to book a 33% rise in sales of its Windows operating system despite a flat PC market.

Meanwhile, at Microsoft’s MSN web service (number two in the US behind America Online), revenues surged 23% on the back of a 40% climb in online advertising, bucking the sector’s downward trend.

For the full year, Microsoft is predicting revenues of $32.2bn to $32.6bn, up from previous projections of $31.4bn to $32bn. However, these figures assume the US economy will not deteriorate further.

Data sourced from: Washington Post Online; additional content by WARC staff