Microsoft Goes Godzilla In Fiscal First Quarter

Solution providers may be experiencing resistance to Windows Vista and Office 2007 within their client bases, but sales of Microsoft's latest flagship products are beginning to pile up on the balance sheet.

Microsoft turned in one of its most impressive financial performances in years during its fiscal first quarter, with profit rising 23 percent on the strength of Vista and Office 2007 adoption as well as the release of the Halo 3 videogame.

During the Redmond, Wash.-based vendor's Q1 earnings call Thursday, Microsoft CFO Chris Liddell said revenue during the quarter, which ended Oct.1, jumped 27 percent, making it the fastest start to a fiscal year Microsoft has had since 1999.

Microsoft has now sold more than 88 million copies of Vista since the OS launched in January, and the business units that oversee Vista and Office 2007 each captured over $4 billion in revenue during the quarter, according to Colleen Healy, general manager of investor relations.

Investors greeted the news with the enthusiasm of a child being handed an ice cream cone, sending Microsoft shares up $3.40 in after hours trading to $35.39, their highest level since February 2003.

Overall, Microsoft pulled in $13.7 billion during the quarter, up nearly $3 billion compared to the same period last year. The vendor netted $4.3 in profit during the quarter, or 45 cents per share, up from $3.5 billion and 35 cents per share during last year's quarter.

Microsoft's Client, Business Division, and Entertainment & Devices segments all experienced healthy gains during the quarter as compared to last year. The Server & Tools division had more modest growth, bringing in $2.9 billion during Q1 compares to $2.5 billion a year ago.

For its fiscal second quarter, Microsoft earnings of between 44 and 46 cents per share, and revenue in a range between $15.6 billion to $16.1 billion.

Microsoft also anticipates earnings for its 2007 fiscal year, which ends June 30, of $1.78 to $1.81, with revenue in a range between $23.3 billion and $23.7 billion.