Microsoft Exceeds Expectations Again

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"We will be impacted just like everybody else," if the U.S. falls into a recession, Chief Financial Officer Chris Liddell said Thursday. "But overall, we feel very optimistic about our second half."

Company officials touted rising sales in each of Microsoft's business divisions, a slate of important upcoming business-software launches and the growing contribution from sales in non-U.S. markets.

Microsoft raised its outlook Thursday for the rest of its fiscal year, which ends in June, matching Wall Street's forecast and sending shares up in after-hours trading.

The software maker's quarterly earnings jumped 79 percent to $4.71 billion, or 50 cents per share, from $2.63 billion, or 26 cents per share in the second quarter a year earlier. Quarterly revenue climbed 31 percent to $16.37 billion from $12.5 billion.

The comparison isn't entirely fair last year, Microsoft deferred more than $1 billion in revenue due to delays in getting Windows Vista to consumers.

Wall Street had been looking for a profit of 46 cents per share on $15.95 billion in sales.

Better-than-expected worldwide PC shipments, tougher anti-piracy measures and growing numbers of businesses switching to long-term volume software licenses helped boost revenue for the two Microsoft divisions responsible for Windows and Office to a total of $9.14 billion, 50 percent more than a year ago.

The division responsible for the Xbox 360 video game system swung to a profit on rising sales of games and accessories, which deliver better margins than the console itself. Microsoft said the division is still on track to be profitable in fiscal 2008.

The weakest spot was Microsoft's online services business, which competes with Google Inc. to sell advertising on the Web. Sales rose 38 percent, but the division widened its loss in the quarter to $245 million, from $118 million a year ago, dragged down in part by its acquisition of online ad company aQuantive Inc.

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