(Updated with stock and conference call information)
The tech bellwether's revenue was $12.92 billion, down from $15.06 billion from the same period last year but above Wall Street's estimate of $12.32 billion. Microsoft earned 40 cents a share on net income of $3.57 billion, down from 48 cents a share and $4.37 billion in the prior year's quarter but well above the 32 cents that analysts expected.
Investors responded positively to the results, driving Microsoft's shares up 5.7%, to $28.11. The broader tech market, in contrast, dipped slightly, with the Nasdaq slipping 0.6%.Microsoft's numbers took a major hit from the launch of its much-hyped Windows 7 operating system, which debuted earlier this week. The results include deferral of $1.47 billion of revenue related to the Windows 7 upgrade program and pre-launch sales of the operating system. This also impacted the company's earnings by 12 cents a share. Adding back the revenue, sales would have totaled $14.39 billion, a 4% decline on the prior year's quarter. Earnings would have equaled 52 cents a share, an increase of 8% on the same period last year. There had been concerns that PC weakness could weigh heavily on Microsoft's first quarter. Despite declining sales, the firm has provided some hints of an improving computer market. "We are very pleased with our performance this quarter and particularly by the strong consumer demand for Windows," said Chris Liddell, Microsoft's CFO, in a statement. "We also maintained our cost discipline, which allowed us to drive strong earnings performance despite continued tough overall economic conditions."