AMID FIRST-QUARTER GROWTH, MICROSOFT SEES FLAT EARNINGS AHEAD

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(April 19, 2001) -- Microsoft Corp. reported today revenue grew 14% in the first quarter, to $6.46 billion from $5.66 billion for the same period last year, and projected that revenue will be flat, at $6.3 billion to $6.5 billion for the next quarter.

The software manufacturer reported sales and marketing expenses rose to $1.2 billion in the quarter, or 18.6% of revenue, up from $1.01 billion, or 17.9% of revenue from a year ago. The company explained the higher expense was due to the cost of new marketing efforts that included the Microsoft Agility campaign, joint marketing with distribution partners for MSN Internet Access and the bCentral small business portal.

Microsoft disclosed revenue for its Consumer Software, Services and Devices unit -- including MSN network services and Internet access, WebTV, games and software -- grew 22% to $460 million. But revenue growth from MSN network services slowed due to the weak online advertising marketplace, revenue per susbcriber on MSN Internet access shrank due to extensive rebate promotions, and game revenue dropped on lower consumer demand. -- Mercedes Cardona

Copyright April 2001, Crain Communications Inc.

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