Microsoft lifted its full-year forecasts and posted 23% quarterly profit growth last night, topping analysts' estimates on strong sales of 'Halo 3' and Vista, and sending its shares up 11%.
The world's largest software maker raised full-year revenue targets across its business divisions and gave a bullish profit forecast for the crucial, current holiday quarter.
Investors have waited for sales of the new Windows Vista operating system to pick up since its January release. Windows, which sits on more than 90% of all personal computers, generates almost 80 cents in profit for every dollar in sales.
'Halo 3', the latest installment of Microsoft's flagship shooter franchise video game, also racked up over $300m in its first week of sales in September.
Microsoft reported a net profit of $4.29 billion, or 45 cents per diluted share, in its fiscal first quarter, up from $3.48 billion, or 35 cents per diluted share, a year earlier. Revenue rose 27% to $13.76 billion in the three months ended September 30.
Microsoft shares, already up 10% in the last month, surged to $35.40 in after-hours trade, up 10.7% from the close and their highest since 2001. Its market capitalisation grew by over $30 billion and its top shareholder, co-founder Bill Gates, saw his fortune grow by $3 billion.
Microsoft raised its full-year revenue outlook for its Windows client sales to a range of 12-13% versus a previous forecast of 9-10%. Revenue at the Windows client division, focused on PCs, rose nearly 25% in the quarter. Operating profit at the division went up 27% to $3.37 billion.
Consumers also bought Xbox 360 consoles to play 'Halo 3', vaulting Microsoft's game machine past rivals in September.
The entertainment and devices division, after six straight annual losses, delivered 91% revenue growth and swung to a $165m profit from a $142m loss a year earlier.
The current holiday quarter is a crucial one for Microsoft as it aims to spur adoption of new computers running Vista. Its entertainment arm also banks on the December quarter generating twice as much revenue as any other quarter of the year.
