Updated from 7:52 a.m. EDT
Microsoft rose nearly 5% early Friday after a strong third-quarter earnings report prompted upgrades at two Wall Street firms.
Citi upgraded the stock to buy from neutral and raised its price target to $36 from $33, while CIBC upgraded the stock to market outperform, citing the software giant's improved outlook.
Shares jumped $1.42 early Friday to $30.51, putting them within striking distance of a 52-week high of $31.46.
It took five years of promises and delays, but Vista -- the latest
and most advanced version of the operating system that the Redmond, Wash., company
built its fortune on -- is finally paying off.
Microsoft said that revenue in its third fiscal quarter ended March 31 jumped 32% to $14.4 billion, beating the Street estimate of
$13.9 billion by a comfortable margin.
Net income grew $4.93 billion, or 50
cents a share, from $2.98 billion, or 29 cents a share, a year earlier.
The latest quarter included 2 cents a share in tax benefits and a
penny in legal charges. Excluding these items, Microsoft earned 49 cents
a share.
Either way, Microsoft surpassed all analyst forecasts. Thomson
Financial's consensus of analyst estimates called for 46 cents a share.
The highest estimate of the 34 analysts surveyed was 47 cents a share.
Charly Tracy, an investor relations official at Microsoft, said in
an interview with
TheStreet.com that the growth came from strong demand
for client products such as Vista, as well as the business software,
notably the flagship Office 2007 suite.
To watch David Peltier's video take of this column, click here.
Kevin Kelleher
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