Corporate spending boosts tech majors

Corporate spending on computers and software gathered steam last quarter, bolstering sales and profit at Microsoft, Intel and International Business Machines. Results from all three companies this week surpassed analysts' predictions, with Microsoft saying on Friday that sales climbed to $17.4 billion (Dh63.8 billion) in its fiscal fourth quarter. That topped the $17.2 billion average estimate of analysts. Intel's revenue forecast for the current quarter, released a day earlier, also exceeded projections. Companies are replacing aging desktop machines and equipping data centres to deliver computing over the internet, via the so-called cloud. That's fuelling demand for new versions of Microsoft programs for businesses, more powerful chips from Intel and technology services provided by IBM. It's also making up for sluggish PC buying from consumers in developed markets. "What Intel said was the enterprise was strong, and that's what you saw in the Microsoft numbers as well," said Pat Becker Jr., a fund manager at Portland, Oregon-based Becker Capital Management Inc. His firm holds Intel and Microsoft shares among the $2.5 billion it has under management. Net income in the fiscal period that ended in June rose 30 per cent to $5.87 billion, or 69 cents a share, Redmond, Washington-based Microsoft said in a statement on Friday. That beat the 58-cent estimate of analysts surveyed by Bloomberg. Microsoft was little changed in late trading on Friday after gaining 4 cents to $27.10 on the Nasdaq Stock Market. Intel, based in Santa Clara, California, slipped 18 cents to $22.81, while Armonk, New York-based IBM climbed $1.25 to $184.90 in New York Stock Exchange composite trading. IBM's second-quarter revenue, reported on Monday, topped predictions. Other technology companies also have benefited from increased spending by businesses. Google Inc., the biggest Web-search company, said last week that ad prices are up because companies are more willing to spend to market online. Microsoft, the world's largest software maker, said companies are snapping up copies of Windows 7, Office software, and programs tailored for servers the powerful machines that outfit data centres. The company also benefited from lower taxes. Its rate fell to 7 per cent last quarter from 25 per cent a year earlier because more earnings were taxed at lower rates in Ireland, Singapore and Puerto Rico, Microsoft said in a statement. The rate explains much of the reason why results surpassed predictions, Chief Financial Officer Peter Klein said in an interview. Unearned revenue which comes from multiyear contracts that isn't recognised in the current period and indicates future sales was also higher than analysts projected. That figure was $17.1 billion, above the average estimate of $15.6 billion, according to Bloomberg data. Microsoft saw higher demand for Windows PCs for corporations than those for consumers, Klein said. From / Gulf News