Microsoftposted earnings that met expectations and revenue thattopped modest Wall Street forecasts, buoyed by strong sales of its popular Office applications package.
The software giant reported that its earnings, excluding items, were 68 cents per share, an increasefrom 62 cents a year ago.
Net income rose 6.1 percent to $5.74 billion from $5.41 billion at the same time last year.
Revenue increased 7 percent to $17.37 billion from $16.2 billion in the year-earlier period helped by its Office product, which remains popular with businesses even in the difficult global economy.
Analysts had expected Microsoft to report earnings of 68 cents per share on revenue of $17.24 billion, according to a consensus estimate from Thomson Reuters.
It is the first time in 10 quarters that Microsoft has not exceeded the average estimate for earnings per share.
Windows sales edged up only 2 percent, in line with limp personal computer sales last quarter, breaking the streak of three straight quarters of declining sales, as compared to the year before. But it fell short of some analysts' hopes.
"We still had Windows miss again, although not by nearly as much as it has the last couple quarters," said Brendan Barnicle, an analyst at Pacific Crest Securities.
"They were just in line on EPS, which typically Microsoft beats," Barnicle said. "Q1 is seasonally not a big quarter for Microsoft, and this was no exception."
The brightest spot for the world's largest software company was an indication that its perennially money-losing online-services unit — including the MSN Internet portal and Bing search engine — may have turned a corner.
The unit lost $494 million in the quarter, the lowest loss in the last seven quarters, slowing the flood of red ink that has cost Microsoft more than $5 billion since it launched Bing in mid-2009, as it invests heavily to catch up with Google.
"Throughout fiscal 2011, we delivered to market a strong lineup of products and services which translated into double-digit revenue growth, and operating margin expansion," said Peter Klein, chief financial officer at Microsoft in the company's earnings release. "Our platform and cloud investments position us for long-term growth."
Microsoft shares slipped in after-hours trading. (Click here to get the latest after-hours quote for Microsoft.)