Microsoft's coffers swell on Vista, Halo 3

Microsoft reported a strong jump in first quarter revenue and profits, as the company benefited from Windows Vista and the launch of Halo 3.

The software maker said it took in $4.29bn in profits, or 45 cents per share, on revenue of $13.76bn for the three months ending 30 September. As for Vista, the company said it saw double-digit growth in multi-year agreements by businesses and saw "the vast majority" of consumers opting for a premium version of the operating system.

CFO Chris Liddell said in a statement: "This fiscal year is off to an outstanding start with the fastest revenue growth of any first quarter since 1999. Operating income growth of over 30 per cent also reflects our ability to translate revenue into profits while making strategic investments for the future."

For the current quarter, Microsoft said its revenue is expected to be in the range of $15.6bn to $16.1bn, with per-share profits of 44 cents to 46 cents. For the full fiscal year, Microsoft said to expect revenue in the range of $58.8bn to $59.7bn, with per-share profits of around $1.78 to $1.81.

In an interview, Microsoft investor relations general manager Colleen Healy noted the software behemoth has lifted its revenue guidance for the year by more than $2bn as it has seen positive reactions to the products introduced in the past nine months.

Microsoft saw particularly strong results in the Windows client business, where revenue grew 25 per cent in the quarter. That was aided by overall strong PC sales as well as gains the company made in reducing piracy rates. Healy said that reduction in piracy rates accounted for about five percentage points of the growth.

Buoyed by the launch of Halo 3, Microsoft saw a 90 per cent increase in revenue for its Entertainment and Devices unit, which also swung to profitability in the quarter. Healy said Microsoft sold 1.8 million Xbox 360 consoles in the quarter but declined to give a forecast for the holiday quarter, citing competitive concerns. The company is still aiming to have the unit profitable for the full fiscal year, Healy said.

Healy added: "It's fantastic to see these products are off to a good start... because they will have a multi-year impact."

Ina Fried writes for CNET News.com