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Microsoft Profits Jump 60%

The software maker roars past Wall Street estimates on the back of robust Windows 7 demand.

Microsoft on Thursday said strong sales of its new Windows 7 operating system helped propel the company to record revenue in its fiscal second quarter.

Revenues rose 14% compared to the same period a year ago, to $19.02 billion. Net income jumped 60% to $6.6 billion, while earnings per share climbed 57%, to 74 cents. Wall Street analysts polled by Thomson Reuters were, on average, expecting EPS of 59 cents.

"Exceptional demand for Windows 7 led to the positive top-line growth of the company," said Microsoft CFO Peter Klein, in a statement. "Our continuing commitment to managing costs allowed us to drive earnings performance ahead of revenue growth," said Klein.

Sales of Windows and related products rose 29%, to $5.1 billion, while sales of server software increased 19%, to $3.8 billion.

Still, Microsoft saw weakness in some of its lines during the quarter, which ended Dec. 31.

Sales of Microsoft Office were down 2.9%, and revenue from online services, such as advertising, fell 2.3%, to $581 million. Xbox and related entertainment sales were also down, declining 9.7%, to $2.9 billion.

Microsoft said it shipped 5.2 million Xbox 360 consoles during the quarter, compared to 6 million shipped in the previous year's period.

Overall, Microsoft executives said they were pleased with the performance of Windows 7, which debuted Oct. 22.

"This is a record quarter for Windows units," said chief operating officer Kevin Turner. "We are thrilled by the consumer reception to Windows 7 and by business enthusiasm to adopt Windows 7," said Turner.

Microsoft shares were up 1.54%, to $29.61, in after hours trading Thursday.

Application mobilization tools are both more effective and more confusing than ever. To develop this report, InformationWeek Analytics polled nearly 700 business technology professionals and interviewed mobile application experts. Download the report here (registration required).d

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