NEW YORK (Reuters) - Shares of Microsoft Corp. (MSFT.O) edged higher on Friday after the world’s largest software maker reported better-than-expected quarterly results and raised its 2007 profit target.
Microsoft shares, which last week hit their highest level in about 5 years, were up 1 percent at $30.74 in early trading on the Nasdaq, boosted by the report of solid sales of server software and Xbox 360 game consoles.
Late on Thursday, Microsoft posted a smaller-than-expected 28 percent drop in fiscal second-quarter earnings as it deferred more than $1 billion in net income related to the consumer launch of its Windows Vista operating system and Office 2007 software due next week. Investors expect the new products to drive sales and earnings in the coming quarters.
For the full year, Microsoft lifted its earnings outlook range to $1.45 to $1.47 per shares from an earlier range of $1.43 to $1.46 per share.
The results prompted a chorus of price target upgrades from Wall Street analysts, including Citibank, Banc of America and First Albany. RBC Capital analyst Robert Breza lifted his target to $35 from $32.
“This (target raising) is based on the positive results combined with a compelling product cycle, which we believe will lead to increasing estimates as the year progresses,” he said in a note to clients.
Microsoft said its Xbox 360 sales were strong, but it trimmed its fiscal second-half sales forecast as the company looks to make the business profitable in the next fiscal year.
The Redmond, Washington-based company now expects to have shipped a total of 12 million Xbox 360s by the end of June, below an earlier target of 13 million to 15 million consoles.