Windows 95 Opens Door for Microsoft’s 50% Profit Jump

Microsoft Corp., the world’s leading computer software maker, on Monday reported a 50% increase in profit for its fiscal fourth quarter, exceeding analysts’ expectations.

The Redmond, Wash.-based company posted a profit of $559 million, or 87 cents a share, for the three months ended in June, up from $368 million, or 58 cents, a year ago.

Analysts on average had predicted quarterly earnings of 85 cents a share.

“We completed another consecutive year of growth in both revenues and profits led by the success of the Windows 95 operating system,” Chief Financial Officer Mike Brown said in a statement.

The maker of the Windows operating system, used in more than 80% of the world’s computers, said revenues from sales of software included with computers reached $650 million for the quarter and $2.5 billion for the year, a 52% increase over fiscal 1995.

Microsoft announced its earnings after the close of trading. The stock fell $1.23 to $119.75 and was the second-most actively traded on the Nasdaq. After hours, it slipped an additional $1 to $118.75 after the company warned of slower growth.

Brown said he expected the company’s growth to slow in the current fiscal year.

Brown declined to be more specific, but analysts predict revenue growth in the 25% range for fiscal 1997.

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Continental Airlines said second-quarter profit rose 64%, and Northwest Airlines’ almost doubled, as the industry continues to benefit from higher ticket prices and a busy summer travel season.

Houston-based Continental reported the highest quarterly profit in its history, earning $167 million, or $2.53 a share, from $102 million, or $1.51, a year ago.

Wall Street was expecting the company to earn $1.97 a share.

Northwest, based in Minneapolis, said net income rose to $202.8 million, or $2.02 a fully distributed share, compared with $104.8 million, or $1.37, a year ago. Fully distributed per-share figures assume that all of the stock being issued to employees in exchange for wage and benefit cuts already has been issued.

Wall Street was expecting Northwest, the fourth-largest U.S. airline, to earn $1.85 a share.

At a Glance:

Bristol-Myers Squibb and Warner-Lambert posted increases in second-quarter earnings that matched or exceeded expectations. New York-based Bristol earned $655 million, or $1.31 a share, compared with $608 million, or $1.20, last year.

Morris Plains, N.J.-based Warner-Lambert Co. earned $213 million, or 79 cents a share, compared with $201 million, or 75 cents, a year ago.

RJR Nabisco Holdings said its second-quarter earnings rose 14% to $90 million, or 34 cents a share, from net income of $79 million, or 30 cents, in the year-earlier quarter.

American Express reported profit rose 10% in the second quarter to $452 million, or 93 cents a share, from $410 million, or 81 cents, in the same period a year ago.

Qualcomm said its fiscal third-quarter profit fell 79% to $1.51 million, or 2 cents a share, from $7.26 million, or 13 cents, in the year-ago quarter.

Liz Claiborne said second-quarter earnings rose 33% to $22.7 million, or 31 cents a share, from $17 million, or 23 cents, a year earlier.

Zenith Electronics said its second-quarter loss of $33.2 million, or 51 cents a share, compared with $45.3 million, or 97 cents, a year earlier.

MGM Grand reported that net income soared to $20.6 million, or 41 cents a share, contrasted with a net loss of $6.6 million, or 14 cents, for the same period in 1995.

Mirage Resorts said second quarter-earnings fell below analyst expectations because gamblers won more than expected at its Las Vegas Mirage casino. Net income rose 42% to $40.6 million, or 21 cents a share, from $28.6 million, or 15 cents, in the year-earlier period.

Western Atlas reported a 23% increase in second-quarter earnings to $29.9 million, or 55 cents a share, compared with $24.3 million, or 45 cents, in the year-ago period.

Royal Caribbean Cruises said second-quarter earnings rose 21% to $38.3 million, or 60 cents a share, from $31.5 million, or 50 cents, last year.

Horizon/CMS Healthcare said its fiscal fourth-quarter profit rose to $14.1 million, or 27 cents a share, compared with net income of $8.4 million, or 27 cents, in the year-ago period.

Union Carbide said second-quarter net income fell 24%, to $173 million, or $1.23 a share, from $228 million, or $1.59, a year earlier.

Quaker State said second-quarter earnings rose 45% to $7.17 million, or 22 cents a share, up from year-earlier profit from discontinued operations of $4.96 million, or 16 cents.

Ryder System said second-quarter profit fell 3% to $44 million, or 54 cents a share, from $45.3 million, or 57 cents, a year earlier.

Presstek said it earned $1.6 million, or $.10 a share, in the second quarter, compared with $177,000, or 1 cent, in the 1995 quarter.