Microsoft reported earnings excluding items that beat analysts' expectations though it posted a net loss — the first since it went public in 1986 — and delivered revenue that fell short of expectations.
The loss was attributed to a previously announced charge for writing down the value of its ailing online unit.
Still, its shares rose after-hours trading on Thursday. Click here to get the latest quote.
Excluding the write-down, but factoring in deferred revenue, Microsoftsaid it earned 67 cents per share in the quarter, down from 69 cents a share in the year-earlier period.
Microsoft also deferred $540 million of Windows revenue due to an upgrade discount it is offering customers who buy machines running Windows 7 before the launch of Windows 8 in late October.
The company reported a net loss of $492 million, or 6 cents per share, compared with a profit of $5.87 billion, or 69 cents per share, in the year-ago quarter.
Revenue was $18.06 billion, an increase from $17.37 billion a year ago but short of expectations as slowing PC sales have taken a toll on sales of the company's flagship Windows operating system.
Analysts had expected the company to report earnings excluding items of 62 cents per share on revenue of $18.12 billion, according to Thomson Reuters.
Amid the pressure from other tech giants like Google and Facebook , there has been some buzz questioning Microsoft's mojo.
Thomson Reuters contributed to this report.
An earlier version of this story incorrectly said that earnings excluding items were 73 cents a share. In fact, they were 67 cents a share.