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Microsoft Beats Earnings Forecast; Shares Rise

Microsoftreportedbetter-than-expected quarterly earnings and revenue that met forecasts on Thursday despite a soft market for personal computers, sending its shares higher in extended trading.

Microsoft
Microsoft

The company posted fiscal second-quarter earnings excluding items of78 cents per share, up from 77 cents in the year-earlier period.

Net income was $6.62 billion, down slightly from the $6.63 billion a year ago.

Revenue was $20.9 billion, a 5-percent increase from $19.95 billion a year ago, helped by its Office, server software and Xbox businesses. The figure was also boosted by the first inclusion of revenue from Skype, the online phone firm Microsoft bought last year, and a one-time gain of $225 million from favorable foreign currency rates.

Analysts had expected the company to report earnings excluding items of 76 cents on $20.92 billion in revenue.

The per-share figure rose as Microsoft had fewer shares outstanding in the most recent quarter.

Companies and emerging markets are still hungry for new PCs, according to the latest data, but customers in mature markets are ditching their Windows-powered netbooks in favor of Apple's iPad, Amazon's Kindle or postponing a PC purchase until the economy improves.

"There's really three things that impacted the consumer side," said Peter Klein, Microsoft's chief financial officer, reflecting on the dip in computer sales. "The supply chain from Thailand, there's some macro (economic factors) and certainly some competition from alternative form factors such as tablets and readers."

As a result, Microsoft's key Windows unit reported a 6 percent dip in sales to $4.7 billion. The situation shows no immediate signs of improvement.

Though, that was offset by gains in its business, server, Xbox 360 and online services units.

The server and tools unit, which provides the software and services behind Microsoft's "cloud" — or Internet-centric computing platform — posted an 11 percent rise in sales to $4.8 billion.

The entertainment and devices unit reported 7 percent higher sales, largely due to booming sales of the Xbox game console, which has been rejuvenated by its hands-free Kinect sensor add-on.

The online-services unit, which has been losing money, posted a 10-percent gain in sales as the company's Bing search engine grabbed more market share.

Following the earnings announcement, the company's shares rose 3 percent in trading after the closing bell. (Click here to get the latest after-hours quote.)

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