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Microsoft Posts Record Quarterly Sales

Redmond reports strong Windows revenue in third quarter and solid performance across other lines.
Microsoft on Thursday reported earnings for its fiscal third quarter ended March 30.




Windows 7 screen shot
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The software maker said earnings per share for the period increased 36%, year-over-year, to 45 cents. Net income climbed 35%, to $4.01 billion, on record revenue of $14.5 billion, a 6% gain from the year ago quarter.

Wall Street analysts surveyed by Thomson First Call were, on average, expecting Microsoft to report quarterly EPS of 42 cents on revenue of $14.4 billion.

Microsoft officials said the company is enjoying gains in its core software business and other areas. "Windows 7 continues to be a growth engine, but we also saw strong growth in other areas like Bing search, Xbox Live and our emerging cloud services," said Microsoft CFO Peter Klein, in a statement.

"Our record third-quarter revenue along with continued rigor on cost management resulted in exceptional EPS growth," Klein said.

Microsoft's results were mixed across its various product lines. Sales in the company's key Windows unit were up 28%, to $4.4 billion. Microsoft released Windows 7 on October 22nd. The extent to which businesses and government agencies adopted the OS will be key to helping Microsoft recover credibility in the enterprise market.

Corporations shunned Vista, Windows 7's predecessor, out of concerns about price, intrusive security features, and lack of compatibility with older applications. As a result, most businesses still run their PCs on Windows XP, an OS that is almost ten years old and for which Microsoft is phasing out support.

Microsoft also saw modest gains in its Server and Tools division, where sales increased 2.4%, to $3.6 billion.

Revenue from the company's Business unit was off 6%, to $4.2 billion, as customers remained on the sidelines in anticipation of the arrival of Office 2010, which is set for release in June. In addition to the standard versions of Word, Excel, PowerPoint, and OneNote, Office 2010 also includes free access to Web-based editions of the apps.

Sales in Microsoft's Online Services unit were up 12%, to $566 million, while revenue from the company's Entertainment & Devices group, which is home to the Xbox and Windows Games products, rose 2.2%, to $1.7 billion.

Microsoft shares closed up .19%, to $31.39, in trading Thursday.