Microsoft Lifts Off

aQuantive is expected to add between $500 million and $600 million in revenue in the coming year, but it will not be profitable initially, Liddell said. During 2008, the acquisition "will be a drag on operating income of a couple of hundred million dollars." But Microsoft expects aQuantive to bring significant benefits going forward, he added.

"On the strength of a great first quarter, we're raising our full-year guidance" by $2 billion in revenue and by 8 to 9 cents in EPS for the year, Tracy said.

Microsoft said second-quarter revenue would range from $15.6 billion to $16.1 billion and EPS would be 44 cents to 46 cents. Analysts were expecting revenue of $15.64 billion and earnings of 45 cents a share.

The company said fiscal 2008 revenue would be $58.8 billion to $59.7 billion and EPS would be $1.78 to $1.81. Analysts were projecting revenue of $57.4 billion and EPS of $1.73.

On Wednesday, the company said it had taken a 1.6% stake in social networking site Facebook for $240 million. Microsoft will be the exclusive third-party advertising platform partner for Facebook and will sell ads for Facebook internationally.

Tracy said the company was happy to become Facebook's exclusive advertising platform because of the site's large and growing member base.

Deferred, or unearned, revenue rose 14% year over year, to end the quarter at $11.6 billion, Tracy said. Deferred revenue had been expected to drop 10% sequentially from the end of fiscal 2007, but declined by only 8.5%, a difference of nearly $200 million, he said.

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