Tax benefit helped Microsoft's 3Q earnings

Microsoft's third-quarter results, reported last week, were helped by a tax benefit.

This one just happened to be a bit bigger than the stimulus checks we should be getting from the Internal Revenue Service starting this week.

Turns out Microsoft and Uncle Sam have been going back through the company's books from 2000 to 2003. Not knowing how that would end up, Microsoft had "over accrued" its tax provision in past quarters, said Colleen Healy, general manager of investor relations. With the review settled, the company was able to reduce that provision.

Rather than buying an Apple iPod to help stimulate the U.S. economy, Microsoft used the tax benefit to wipe out the $1.42 billion charge against earnings the company took for an antitrust fine issued by the European Union.

And it made the company's effective tax rate for the quarter — have a seat, please — 9 percent. OK, the fine was not tax-deductible, so the company's adjusted effective tax rate for the quarter worked out to 29 percent.

"So basically one government took away and the other government granted," Healy said.

Longer term, Microsoft is expecting its tax rate to decline to 28 percent in fiscal 2009, which begins July 1. That's because the company is getting a greater share of its earnings from lower tax-rate jurisdictions, said Chief Financial Officer Chris Liddell.

"We are now in a period where you can expect to see our tax rate start to go down year after year, not only in fiscal year '09, but in fiscal year '10 as well as a result of the changes in our business model," he said.

Already, two-thirds of the company's sales come from users outside the U.S.

Playing for health

A lot of people play games for fun, of course. But some people, especially baby boomers, may be playing them for reasons of health.

At least that's the case Big Fish Games, the Seattle casual online-games developer, would like to make.

In a release, Big Fish says a recent customer survey that showed boomers play games to improve mental and physical health.

Respondents, the company said, cited benefits that included less stress, improved concentration, increased memory and just better habits (not coincidentally, perhaps, 54 percent said they watched less television).

The company even talked about how playing a game helped a stroke victim.

Stopping time

As our Brier Dudley noted recently, it was a sad day for geek fashion last week when a Microsoft exec disclosed a permanent time out on new Spot watches.

The Spot caught the fancy of Bill Gates himself, who introduced them at the Consumer Electronics Show five years ago.

The watch uses airwaves to broadcast bits of information — sports scores, traffic reports — to the watches and other devices.

The service's information-delivery operation, called MSN Direct, will continue to operate in other niches, including auto GPS units demonstrated at CES this year.

Maybe those big-faced watches will become collector's items.

On the record

Service extension: Seattle based Melodeo has made its nuTsie mobile music service available on Research in Motion's BlackBerry.

New products: Limeade, an online health-services company in Bellevue, has launched Limeade Employee Vitality, a platform to help improve employee health with information, tracking and other online services.

Download, a column of news bits, observations and miscellany, is gathered by The Seattle Times technology staff. We can be

reached at 206-464-2265 or biztech@seattletimes.com.