Microsoft Earnings, Revenue Easily Beat Estimates

Microsoftshares popped in late trading Thursday as the company turned in a profit and sales that both topped Street targets, helped by higher sales of its flagship Windows and Office software and the launch of the latest blockbuster Halo video game.

Microsoft
Microsoft

The world's biggest software company said it earned $5.4 billion, or 62 cents a share in its fiscal first quarter, up 51 percent from $3.6 billion, or 40 cents a share last year.

Sales for the most recent quarter jumped to $16.2 billion, from $12.92 billion last year.

Wall Street analysts who monitor Microsoft estimated on average that the Redmond, Wash., company would report a profit of 55 cents a share on sales of $15.8 billion, according to data accumulated by Thomson Reuters.

Shares of Microsoft were changing hands about 2 percent higher in extended trading Thursday. Get after-hour quotes for Microsoft here.

The stock, a component of the Dow Jones Industrial Average, finished the regular Nasdaq session up almost 1 percent at $26.28. The shares are down 14 percent so far this year.

Looking at sales by business unit, Microsoft reported Windows and Windows Live revenue of $4.79 billion, Server and Tools sales of $3.96 billion, Online Services revenue of $527 million, Business Division revenue of $5.13 billion, and Entertainment and Devices sales of $1.8 billion.

The increase in the latest quarter's profit was exaggerated by the deferral of some revenue in the year-ago quarter relating to the launch of its Windows 7 operating system. Microsoft's primary product has now sold a record-breaking 240 million copies in one year.

"Microsoft had a very good quarter," said Morningstar analyst Toan Tran. "Windows is still doing well, Office is doing well and servers and tools are doing well. The big three businesses are firing on all cylinders as the PC upgrade cycle continues."

"These are Microsoft's core businesses and they're just doing really well right now," Tran said.

Chief Financial Officer Peter Klein said the company had not seen any adverse effect on sales of computers running Windows due to Apple'spopular iPad tablet device.

"We haven't seen that at all," said Klein. "Analysts who have done research on it, largely think this (the tablet market) is additive to PC markets as opposed to instead of PCs."

Klein said companies were continuing to buy new computers, maintaining the recovery in tech spending, but consumers were not so strong.

"We feel very good about the business refresh," said Klein. "On the consumer side, it probably was a little bit less than people had anticipated, but it was still growth."

Earlier Thursday, Microsoft CEO Steve Ballmer pumped up unique features in the company's new Web browser and smart phone software at the company's annual pep rally for people who will build programs for the Web, Windows computers and phones.

Internet Explorer 9, which is in beta test form, uses more of a PC's hardware to make pages load and run faster. A new version of the underlying code also was being released for developers Thursday.

- AP and Reuters contributed to this story.