Updated from Oct. 26
Strong sales of databases helped Microsoft (MSFT Quote) beat expectations on the top and bottom lines in its fiscal first quarter, but the company's second-quarter earnings will likely be on the light side. In early Friday trading, Microsoft's stock rose 28 cents, or 1%, to $28.63. The software giant said after Thursday's close that it earned $3.48 billion, or 35 cents a share, compared with $3.14 billion, or 29 cents a share (including a 2-cent legal charge) in the year-ago quarter. Revenue was up 11% to $10.81 billion. Analysts polled by Thomson First Call were looking for a 31-cent profit on sales of $10.75 billion. The company's server and tools division grew year-over-year revenue by 17%, including 30% growth for the company's SQL Server database business. The division earned $2.6 billion, compared with $2.5 billion a year ago. The entertainment and devices division, which includes the Xbox 360 business, grew revenue by a strong 70%, to $1 billion, and sharply narrowed its loss. The division lost $96 million, down from $173 million a year ago. CFO Chris Liddell attributed the better margins to decreasing component costs and to better attach rates for higher-margin gaming software.



