Microsoft Up Modestly

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.