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Microsoft first-quarter profits grow

Microsoft Corp. Thursday said its first quarter profit climbed as personal computer sales and business demand fueled higher sales.
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Microsoft said Thursday that earnings for its latest quarter beat expectations, driven by business demand for server software and its core Windows and Office products.

The Redmond, Wash.-based company posted earnings of $2.9 billion or 27 cents a share for its fiscal first quarter, up 11 percent from a year earlier, when it earned $2.6 billion or 24 cents a share. Revenues for the quarter were up 12 percent to $8.2 billion.

(MSNBC is a Microsoft-NBC joint venture.)

Microsoft credited the strong results to growth in sales of personal computers, back-end server computers, and “overall improvements” in spending on information technology led by small and midsized companies.

“We've had a strong beginning to what we expect will be a very good year with continued growth in both our commercial and consumer businesses," Chief Financial Officer John Connors said in a statement.

Microsoft took the unusual step of pointing out in its earnings statement that net income for the quarter exceeded the company’s previous guidance by 2 cents a share. That eliminated some of the guesswork that often goes on immediately after the company releases its results, as Microsoft analyst estimates usually match company guidance closely.

Microsoft fine-tuned its guidance for the rest of its fiscal year, but the forward-looking figures remained in line with analyst expectations.

In extended-hours trading after the results were released, Microsoft fell 72 cents to $27.84 a share.

Analysts had expected Microsoft to report earnings of 30 cents a share after adding back 5 cents a share in equity compensation, according to Thomson Financial.

In its earnings release, Microsoft highlighted growth of server software for business management, which showed revenue growth of 20 percent over the comparable quarter last year. The company said consumer businesses also performed well, with MSN revenue up 10 percent over a year earlier and home and entertainment revenue up 9 percent.

MSN, Microsoft’s entry in the business of online Internet access and content, recently has become profitable, while the home and entertainment business, including Xbox video consoles, is a money-loser.