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Microsoft earnings beat; shares rise 5%

CNBC with Reuters
Microsoft Q1 earnings 'big surprise'

Microsoft said earnings rose 17 percent, which was better than expected, as strong business sales of its Office and server software offset weakness in its flagship Windows system.

After the earnings announcement, the company's shares climbed more than 5 percent in extended-hours trading. (Click here to get latest quote.)

"We are seeing lots of consumer excitement for Xbox One, Surface 2 and Surface Pro 2, and the full spectrum of Windows 8.1 and Windows Phone devices," Microsoft CEO Steve Ballmer said in a statement.

Net income rose 17 percent to $5.24 billion, or 62 cents a share, in the fiscal first-quarter from $4.47 billion, or 53 cents a share, in the year-earlier period.

Revenue increased 16 percent to $18.53 billion from $16.01 billion a year ago.

Analysts had expected the software behemoth to report earnings excluding items of 54 cents a share on $17.79 billion in revenue, according to a consensus estimate from Thomson Reuters.

Commercial revenue grew 10 percent to $11.20 billion, which include revenue from SQL Server, Lync, SharePoint and commercial cloud. Devices and Consumer revenue grew 4 percent to $7.46 billion, the company said in a statement.

—Reuters contributed to this report.