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Microsoft Profits, Revenues Up Strongly

Published October 28, 2010 at 2:05 PM PDT

This story was published more than 14 years ago.

Microsoft Corp. said Thursday that its net income in the latest quarter rose 51 percent, boosted by higher sales of Windows and Office software to businesses.

In last year's quarter, Microsoft deferred some revenue from Windows sales. Had it not done so, net income would have been only 16 percent higher this year in comparison.

For the fiscal first quarter, which ended in September, net income rose to $5.4 billion, or 62 cents per share, from $3.6 million, or 40 cents per share, in the same period last year.

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Revenue increased 25 percent to $16.2 billion, from $12.9 billion a year ago.

Microsoft beat Wall Street's expectations on both counts. Analysts surveyed by Thomson Reuters had forecast net income of 55 cents per share on $15.8 billion in revenue.

Microsoft said the increase in sales to businesses of the newest versions of its Windows operating system, Office programs and server software made up for softer-than-expected revenue from consumer PC buying in the quarter.

"We ended up in this great sweet spot in business spending that was re-emerging after the downturn," Microsoft's general manager of investor relations, Bill Koefoed, said in an interview. It "aligned just perfectly with our product launches."

The Windows division's revenue rose 66 percent to $4.8 billion. Office and other business software brought in $5.1 billion, a 14 percent jump. The group that makes server software reported a 12 percent increase in revenue to $4 billion.

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Microsoft's online revenue, which comes primarily from search advertising, edged up 8 percent to $527 million. That segment widened its operating loss in the quarter to $560 million, however, as the company continued to spend money on chasing Google Inc., the No. 1 Web search provider.

Shares of Microsoft, which is based on Redmond, rose 41 cents, or 1.6 percent, to $26.69 in extended trading Thursday after the release of results. Earlier, the stock added 23 cents to close at $26.28.