Microsoft Profits Soar 51%

Microsoft reported Thursday that profits rose 51% in its first fiscal quarter, as businesses and consumers continued to buy up copies of the latest versions of Windows and Office.

The software maker said net income for the quarter ended Sept. 30 was $5.4 billion, or 62 cents a share, compared to $3.6 billion, or 40 cents a share, the same period a year ago. Revenue rose 25% to $16.2 billion from $12.9 billion. Operating income rose 20% to $7.1 billion.

Microsoft beat Wall Street analysts' average estimate of 55 cents a share on revenue of $15.8 billion, according to Thomson Reuters.

"This was an exceptional quarter, combining solid enterprise growth and continued strong consumer demand for Office 2010, Windows 7, and Xbox 360 consoles and games," Peter Klein, chief financial officer at Microsoft, said in a statement.

Microsoft saw 11% year-over-year growth in its business division, which includes its server and database businesses. Office sales were a key driver, but Windows 7 was also a big seller, as businesses continued to replace older systems with computers running the new OS. Microsoft, which has sold more than 240 million licenses for Windows 7 to date, said the PC market grew between 9% and 11% in the quarter.

"We are seeing improved business demand and adoption," Kevin Turner, chief operating officer at Microsoft, said. "Our enterprise agreement rates were strong, reflecting business commitment to Windows 7, Office 2010, and our server and database products."

Sales of Microsoft's Office productivity suite alone were up 15% year over year. The first fiscal quarter was the first full quarter that Office 2010 was available. Microsoft formally launched the software in May.

Revenue from Microsoft's consumer division rose 26% year over year. On the gaming side, sales of the Xbox 360 video-game console rose 38%. The console has outsold the Sony PlayStation 3 and the Nintendo Wii each of the last four months, according to Microsoft.

Microsoft also reported progress in its efforts to grab a bigger share of online search from market leader Google. Online advertising revenue grew 13% year over year, primarily driven by growth in search queries on Bing.

Microsoft is in the process of taking over search on Web portal Yahoo's sites in the U.S. and internationally. In addition, search advertising listings on Yahoo will be handled through Microsoft's adCenter platform, as part of a 10-year deal signed last year. On Wednesday, Microsoft announced that it had finished moving Yahoo's paid search listings in the U.S. and Canada over to adCenter.

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