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Northwest stalwarts Microsoft, Starbucks, Amazon report earnings

Three major Seattle-area-based companies reported earnings Thursday. Here is how they fared:

Starbucks profit climbs as US sales increase

NEW YORK (AP) - Starbucks reported a stronger quarterly profit on Thursday as customers in the U.S. continued shelling out more money at its cafes.

The Seattle-based chain said global sales at established locations rose 6 percent for its second fiscal quarter, including in the U.S., where it has more than 11,000 cafes. Operating margin also improved as a result of lower costs for ingredients, and the company raised its profit outlook for the year.

Chief Operating Officer Troy Alstead said in a phone interview that the domestic sales increase was the result of an uptick in customer visits, as well as people spending more on average when they visited.

He noted that Starbucks delivered the stronger sales despite the severe weather, which has been cited by companies including Dunkin' Brands and McDonald's Corp. for weak sales.

Alstead stressed the popularity of Starbucks' new La Boulange bakery items that have been rolling out in recent months. He downplayed a recent hiccup with the rollout when the company decided to offer its pumpkin and lemon loaves again after customers complained.

"Oh, tweaks are always happening," Alstead explained of new product introductions.

After seeing through the rollout of the baked goods, Alstead said Starbucks will move on to boosting lunch options. He said the company is already testing some items.

Starbucks Corp. keeps finding ways to attract customers or getting them to spend more. The measures have included price hikes, getting people to sign up for its loyalty program to boost visits and the rollout of new breakfast sandwiches and bottled juices.

During the first three months of the year, sales at established locations also rose 6 percent in the unit encompassing Europe, the Middle East and Africa, where Starbucks has struggled to compete against local cafes in recent years. In Asia, the figure rose 7 percent.

For the quarter, the company earned $427 million, or 56 cents per share, which was in line with Wall Street expectations. A year ago, it earned $390.4 million, or 51 cents per share.

Revenue rose to $3.87 billion, but was short of the $3.96 billion analysts expected.

The company stood by its outlook for comparable sales to be up mid-single digits for the year. It now expects to earn between $2.62 and $2.68 per share, from its previous guidance of $2.59 and $2.67 per share.

Its stock rose $1.10 to $72.19 in after-market trading.

Microsoft 3Q earnings beat Street expectations

LOS ANGELES (AP) - In Satya Nadella's first quarterly earnings release as chief executive, Microsoft Corp. on Thursday posted earnings and revenue that beat Wall Street expectations, offering new justification for the CEO's focus on cloud computing.

Factoring out special items from a year ago, revenue in the January-March quarter grew 8 percent.

Nadella, who replaced longtime CEO Steve Ballmer in February, said in a statement that the quarter's results "demonstrate the strength of our business, as well as the opportunities we see in a mobile-first, cloud-first world."

Microsoft's stock rose $1.09, or 2.7 percent, to $40.95 in after-hours trading after the results were released. That followed a 17-cent gain to $39.86 in the regular session.

"It's a good first quarter of earnings for Satya out of the box," said analyst Shannon Cross of Cross Research. "This was enough to offset concerns that investors might have had that growth was slowing or the impact Amazon or other competitors might be having on the cloud strategy."

The company also benefited from the end of support for its 13-year-old operating system, Windows XP, on April 8. Many companies upgraded computers en masse to make sure they'd continue to receive support from Microsoft, including anti-virus updates.

That transition - which helped boost Windows revenue by 4 percent - helped Microsoft buck a 2-4 percent decline in shipments in the quarter as estimated by market research firms Gartner and IDC.

Chris Suh, Microsoft's general manager of investor relations, said it was hard to tell how much Windows revenue benefited from the end of XP. But he said about 10 percent of all Windows computers are still running XP, meaning the company would likely continue to benefit going forward. "It's probably not done. There's a bit of a long tail that will drag out over a long period of time," he said in an interview.

Overall, Microsoft posted flat revenue and a decline in net income for the January-March quarter.

Revenue gains from its Windows operating system and cloud computing services like Azure were offset by the lack of special upgrade offer revenues from a year ago.

Net income in the quarter through March 31 came to $5.66 billion, or 68 cents per share, down from $6.06 billion, or 72 cents per share, in the same period a year ago.

Revenue was nearly unchanged at $20.40 billion, compared with $20.49 billion a year ago.

Analysts polled by FactSet expected Microsoft to post earnings of 63 cents per share on revenue of $20.39 billion.

Revenue from devices and consumer products rose 12 percent to $8.30 billion as the company sold more Xbox One game consoles and consumers upgraded systems from Windows XP, for which Microsoft ended support earlier this month.

Commercial revenue grew 7 percent to $12.23 billion, as revenue grew from its Office 365 productivity software. Azure revenue more than doubled.

Total revenue gains of $1.7 billion from various segments were offset by a $1.8 billion decline in upgrade offers revenue and other items.

Amazon 1st quarter net income jumps

NEW YORK (AP) - Amazon's first-quarter profit rose 18 percent as shoppers continued to flock to the online mega retailer to buy goods.

Still, the company forecasts an operating loss for the second quarter as it continues to invest heavily both internationally and at home.

Amazon has long focused on spending the money it makes to grow its business and expand into new areas, from movie streaming to e-readers and even grocery delivery. On Wednesday, it launched Prime Pantry, a grocery delivery service for Prime members And earlier this month, it introduced its first set-top video streaming box called Amazon Fire that sells for $99. Rumors of an Amazon phone have been swirling as well, but nothing has materialized.

"We get our energy from inventing on behalf of customers, and 2014 is off to a kinetic start," said CEO Jeff Bezos.

While investors have largely given Amazon a pass for focusing on growth and investing rather than turning a strong profit, Amazon has been making some moves lately to strengthen its bottom line. It boosted its Prime 2-day shipping membership program annual fee from $79 to $99 in March to offset higher shipping costs.

Shipping costs rose 31 percent to $1.83 billion during the quarter.

And to entice more people to sign up for the service at the $99 price, which includes its streaming video service, on Tuesday the retailer said it inked a deal with HBO to stream some of its older shows online beginning May 21. The news was a coup for Amazon. HBO has steadfastly refused to license any of its programming to other streaming services such as Netflix or Hulu. In a media call, executives did not give specifics but said renewals were exceeding expectations.

Net income for the quarter rose to $108 million, or 23 cents per share. That compares with net income of $82 million, or 18 cents per share last year. Analysts expected 21 cents per share, according to FactSet.

Revenue rose 23 percent to $19.74 billion from $16.07 billion. Analysts expected $19.42 billion.

In fiscal 2014, the company expects revenue of $18.1 billion to $19.8 billion. Analysts expect $19.01 billion. It expects an operating loss between $455 million and $55 million in the second quarter compared with operating income of $79 million last year.

In a call with investors, Tom Szkutak, Amazon's chief financial officer, said the predicted loss is due to investing "heavily" in its international operations as well as other areas of its business, including the content it provides.

In aftermarket trading, Amazon shares rose 35 cents to $337.50, after closing the day up nearly 4 percent at $337.15. The stock reached an all-time high of $408.06 on Jan. 22. Since then, it has dropped 17 percent.
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