Investments hit Microsoft profit

Microsoft New Zealand says investment in new products, real estate and staff, as well as the stronger local currency hit its revenues and profit in the 2003-2004 year.

The local subsidiary of the US software giant has reported a profit of $7.1 million in the year to July 2, 2004 on revenue of $53.5 million. That compares with a profit of $9.5 million on revenue of $54.1 million the previous year.

While the total value of Microsoft products sold in New Zealand annually far exceeds $100 million, the subsidiary is essentially a sales and marketing operation and books only a proportion of the value of sales.

Microsoft New Zealand managing director Ross Peat said while sales revenue was lower, sales volume had actually increased.

He said the company's profit had also taken a hit because of investment in new business, additional staff and real estate.

"They're very accurate signs of a business that's continuing to aspire to good growth."

With many of the company's products priced in US dollars, the New Zealand dollar's strength in the past couple of years had also had an effect on its profitability.

"We've seen impact within one year of anything up 20 to 25 per cent," Peat said.

He said the company remained "comfortable" with the results.

But although the company expected to soon return to growth in sales revenue and volume it was unlikely to be as robust as previously seen.

"We're a larger company and markets are more mature. The notion of growing 20, 30 or 40 per cent per annum - we're unlikely to see that again."

Microsoft New Zealand's US parent last year reported earnings of US$8.17 billion ($11.45 billion) for the year to June 2004 - up from US$7.53 billion the previous fiscal year.

Revenue was nearly US$36.84 billion, up from US$32.19 billion in the 2003 year.

- NZPA