Microsoft Exceeds Expectations Again

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"Think about the revenue several years out and the infrastructure we're building for that," Liddell advised financial analysts in a conference call.

In the back half of the fiscal year, Microsoft is set to release new versions of a number of key franchises, including Microsoft Server 2008 and the SQL Server 2008 database system. Liddell said he also expects PC shipments to remain strong, driving sales of Windows Vista and Office.

"It looks like a very nice report," said Sarah Friar, an analyst for Goldman Sachs, in an interview.

While economic jitters haven't hit tech companies yet, Friar warned that information technology executives are shaving their 2008 budgets and may buy less from Microsoft. The company makes more profit from its business licenses than on sales to consumers, she noted.

Microsoft nevertheless boosted its full-year outlook and now predicts a profit of $1.85 to $1.88 per share on sales of $59.9 to $60.5 billion. Earlier, the company forecast earnings of $1.78 to $1.81 per share on $58.8 billion to $59.7 billion in sales.

For the current quarter, which ends March 31, Microsoft said it expects to earn 43 to 45 cents per share on $14.3 to $14.6 billion in revenue.

Shares of Microsoft rose $1.50, or 4.5 percent, in extended trading after the results were released. They gained $1.32, or 4.1 percent, to close the regular session at $33.25.

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