Microsoft profit falls 24%; share buyback planned

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The Morning Call

By Dina Bass Of Bloomberg News

Microsoft Corp. said fourth-quarter profit fell 24 percent after spending more on its Xbox video-game console. The world's largest software maker announced plans to buy back $40 billion in stock, sending the shares higher.

Net income declined to $2.83 billion, or 28 cents a share, from $3.7 billion, or 34 cents, a year earlier, the Redmond, Wash., company said Thursday in a statement.

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Excluding legal charges, profit was 31 cents, beating a 30-cent estimate by Goldman, Sachs & Co. analyst Rick Sherlund. Sales rose 16 percent to $11.8 billion.

Microsoft, whose stock dropped 14 percent in the quarter, will repurchase shares in two programs of as much as $20 billion each.

Chief Executive Officer Steve Ballmer is seeking to appease investors who criticized spending on Xbox consoles and Internet- based software to catch up to Google Inc. The company also raised its full-year profit and sales forecasts.

''They've come part of the way, but they could afford a lot more,'' said Joseph Rosenberg, chief investment strategist at New York-based Loews Corp., who had wanted a tender offer for $60 billion worth of shares.

The stock this quarter had its worst performance since 2002.

Microsoft said profit for the year that began July 1 will be $1.43 to $1.47, an increase from an April forecast of $1.36 to $1.41.

Sales will be $49.7 billion to $50.7 billion, up from $49.5 billion to $50.5 billion.