Microsoft ( MSFT) soothed investors Wednesday by making some bullish comments on the technology sector and saying it would pump more cash into its entertainment division, a group that includes the video-game console Xbox.

Chief Financial Officer John Connors reportedly said investor sentiment in the tech sector is improving. Price-to-earnings ratios "have started to move to more normal and sane levels," Dow Jones quoted Connors as saying.

Although Microsoft hasn't revealed the amount of money it has spent on the Xbox to date, the company's entertainment branch posted a loss of $177 million in the last quarter. When asked at a CSFB tech conference Wednesday if Microsoft plans to exit the video-game business, Connors replied, "The fallback position is probably to double down and make it successful," according to the company's Webcast.

Analysts are expecting Microsoft to spend more than $2 billion over the next five years on the Xbox machine, which stirred up a lot of chatter on Wall Street when it hit the shelves a year ago. Microsoft has been battling Sony's PlayStation 2 for market share, but it hasn't seen the desired results.

The shares were up 14 cents at $56.68 in after-hours trading on Instinet, on volume of more than 192,000 shares.