[Am-info] Legal costs hit Microsoft profits

[John J. Urbaniak]

I don't know, MSFT stock's way up today.

John


Erick Andrews wrote:

> I don't understand the rationale how MSFT is a good investment
> with these kinds of lawsuits and payouts.  I guess it would be
> like investing in Jesse James or the Dalton brothers.  See:
>
> http://news.bbc.co.uk/2/hi/business/3652027.stm
>
> ---
>
> Giant software firm Microsoft's profits have been hurt by the cost
> of settling a raft of law suits over patents and anti-trust
> allegations.
>
> Microsoft's profits dropped 38% to $1.32bn (œ744m) for its third
> quarter to 31 March, compared with the same period a year earlier.
>
> Legal settlements meant a charge of $2.5bn against its pre-tax
> profits.
>
> But sales rose by a healthy 17% to $9.18bn.  Technology sector
> analysts were delighted at the overall picture.
>
> Ongoing
>
> Microsoft is battling the European Union over a $600m fine, a
> record in an EU anti-trust case.
>
> However, it recently agreed settlements in several patent cases.
>
> It paid $1.6bn to end a patents dispute with Sun Microsystems, and
> $440m to Californian firm InterTrustend in another patent case.
>
> It also settled a class-action anti-trust lawsuit bought against
> it by customers in Minnesota, whose lawyers were seeking a payout
> of up to $505m.
>
> Payout
>
> Investors are now keen for Microsoft to outline what it plans to
> do with its massive cash pile and are pushing for an increase in
> the company's dividend payment.
>
> Microsoft just keeps on growing Chief financial officer John
> Connors said that he would outline the company's plans later this
> year.
>
> Investors can certainly expect to hear more on that at the
> analyst meeting in July," he said.  "I think we have made good
> progress on a number of legal fronts."
>
> As well as the settlements, analysts said they were particularly
> impressed with sales of personal computers and larger servers, two
> key areas of growth.
>
> Server sales increased by 17% in the third quarter, while PCs rose
> by 14%.
>
> "Growth has been phenomenal," said Clark Chang, an analyst at
> Fulcrum Global Partners.
>
> Game on
>
> Another area that is doing well is Microsoft's video-game console,
> the X-Box.
>
> The company has had to cut prices to compete with rivals such as
> Sony's Playstation, but the strategy seems to be paying off.
>
> X-Box sales surged by 30%, though the discounting has had an
> effect on the product's profitability.
>
> Microsoft did, however, add a word of caution.
>
> Mr Connors warned that it might prove difficult for the company to
> keep growing at the frenetic pace seen in previous quarters.
>
> ---
>
> Erick Andrews
>
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