Microsoft Lifts Off

Updated from Oct. 25

SAN FRANCISCO -- Forget Google (GOOG). Enough already about Apple (AAPL). What's Wall Street's favorite tech stock?

For a day at least the answer is Microsoft (MSFT), after the software giant saw its shares surge 12% in early action Friday following a stronger-than-expected first-quarter earnings report.

The Redmond, Wash., software company said revenue was $13.76 billion, up 27.3% from $10.8 billion a year ago. Analysts were expecting a top line of $12.57 billion, according to Thomson Financial.

The company said EPS was 45 cents on net income of $4.3 billion, vs. EPS of 35 cents, on a net of $3.5 billion in the same quarter of last year. Analysts were expecting 39 cents a share.

The stock jumped more than 10% in after-hours trading to $35.33. On anticipation of a solid report, shares hit a new 52-week high of $32.22 during the regular session.

The first quarter was "the fastest growing in seven years," CFO Chris Liddell said on a conference call. "Performance was across all divisions, customer channels and geographies." Growth was fastest in Brazil, Russia, India and China.

Operating margin rose 2 percentage points, to 43%, Liddell said.

"Operating income grew faster than revenue at an impressive 30% clip," said Colleen Healy, manager of investor relations.

Charly Tracy, Microsoft's senior finance manager, attributed the strong earnings to demand across the company's many product lines, but especially in its Halo 3 video game and premium versions of the Vista operating system.