Microsoft Reports 23% Profit Jump, Raises Outlook

Microsoft posted a rise in quarterly profit on Thursday, boosted by healthy demand for personal computers loaded with its Windows operating system and strong sales of its "Halo 3" video game.

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[MSFT  Loading...      ()   ], which closed at $31.99 Thursday, jumped 11 percent in late trading.

The world's largest software maker said net profit in its fiscal first quarter rose 23.2% to  $4.29 billion, or 45 cents per diluted share, from $3.48 billion, or 35 cents per diluted share, a year earlier.

Revenue rose 27 percent to $13.76 billion in the three months ended Sept. 30.

Analysts, on average, had forecast 39 cents per share in first-quarter profit on revenue of $12.54 billion, according to Reuters Estimates.

Market research firms Gartner and IDC said global PC shipments rose about 15 percent in the September quarter, which helped Microsoft as well as the quarterly results of chip maker Intel.

Microsoft also enjoyed strong sales of "Halo 3," the latest installment of its flagship shooter franchise. The blockbuster game title racked up more than $300 million in its first week of sales after its Sept. 25 debut. Consumers also purchased the Xbox 360 console to play the game, vaulting the game machine past rival consoles in September.

For the current quarter, Microsoft forecast earnings in a range of 44 cents to 46 cents per diluted share on revenue of $15.6 billion to $16.1 billion.

Analysts, on average, were forecasting earnings per share of 44 cents a share on revenue of $15.5 billion in Microsoft's fiscal second quarter, according to Reuters Estimates.

The holiday quarter is a crucial one for Microsoft as it aims to spur adoption of new computers running its latest Windows Vista operating system. Its entertainment arm also counts on the December quarter generating twice as much revenue as any other quarter of the year.

Microsoft also raised full-year earnings estimates to a range of $1.78 to $1.81 per share from a previous range of $1.69 to $1.73. It also raised its full-year revenue estimate range by almost $2 billion, to $58.8 billion to $59.7 billion.

Wall Street analysts, on average, were forecasting fiscal 2008 earnings of $1.73 per share on revenue of $57.3 billion.

As of the close of Wednesday trade, Microsoft shares had fallen about 1 percent since it reported quarterly results in July compared with 2 percent declines for both the S&P 500 and Nasdaq.

"It was a huge beat," said First American Funds Senior Analyst Jane Snorek. "The guidance I think is pretty good for the year. Guidance for next quarter is kind of in the middle of what I had."

"These are all huge (revenue) numbers in every division. I'm sure the (second-quarter) guidance is cautious. I'll take it," Snorek added. "This is going to be good for the tech sector."