msnbc.com news services
updated 10/27/2005 5:34:54 PM ET 2005-10-27T21:34:54

Microsoft Corp. Thursday posted a 24 percent increase in quarterly profit on robust sales of its Windows software for personal computers.

The software giant's net income for the quarter ending Sept. 30 was $3.14 billion or 29 cents per share, compared with $2.53 billion or 23 cents per share a year earlier.

Excluding a legal settlement charge, Microsoft earned 31 cents per share for the fiscal first quarter, a bit more than the 30 cents expected on average by analysts, according to Reuters.

(MSNBC is a joint venture of Microsoft and NBC.)

Revenue was $9.74 billion, up 6 percent over the comparable quarter a year ago.

Net income for the quarter was reduced 2 cents a share by a charge for a $761 million settlement of long-running litigation with RealNetworks Inc. Net income in last year's first quarter was similarly reduced by 3 cents a share for a settlement of legal action filed by Novell.

While Microsoft earnings were a bit ahead of expectations, the revenue figure fell a bit short of estimates, as did the company's projections for the current quarter. The earnings were released after the close of regular Nasdaq trading but fell 65 cents a share in after-hours trading.

Microsoft said revenues would come in at $11.9 billion to $12 billion in the second quarter, compared with analyst estimates of $12.3 billion. Earnings were forecast at 32 or 33 cents for this quarter.

Charles Di Bona of Bernstein & Co. said the company performed well overall despite the slightly disappointing revenue figure.

“It’s not a bad earnings number,” he said.

The company also said it would accelerate its stock repurchase plan, aiming to finish the remaining $19 billion buy-back no later than December 2006.

Microsoft said its results were driven by "healthy" demand for its core platform software and by growth in PC and server shipments.

“We’ve had a good start to an important year for the company,” chief financial officer Chris Liddell said in a statement. “We continue to see healthy demand for our products, and customer excitement is high for our next wave of product innovations kicking off next month with the launches of Xbox 360, SQL Server 2005 and Visual Studio 2005.”

The company’s guidance for the full fiscal year ending June 30 was little changed from the previous quarter’s guidance for that period.

Reuters and The Associated Press contributed to this report.

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