Updated from 9:24 a.m. EDT

It's only fitting that a wildly uneven earnings season for technology companies should near its close with Microsoft ( MSFT) beating first-quarter profit estimates while also forecasting soft sales.

The mixed performance left Wall Street nonplussed. The stock traded lower in a single-percentage-point range overnight, then firmed to $25.30 in early Friday trading, up 45 cents, or 1.8%. Investors are probably glad for the muted reaction given the panic that followed earlier disappointments at Amazon ( AMZN) and eBay ( EBAY).

Analysts were also in a forgiving mood, with Banc of America, UBS and Piper all reiterating the equivalent of buys on the stock and CSFB raising it to outperform.

Thursday night, the Redmond, Wash., software giant reported first-quarter earnings of $3.14 billion, or 29 cents a share, compared with $2.53 billion, or 23 cents a share, a year ago. The latest quarter had a charge of 2 cents a share for a legal settlement with RealNetworks ( RNWK), while last year's results included a charge of 3 cents a share for a legal settlement with Novell ( NOVL).

The consensus estimate gathered by Thomson First Call, which for the first time includes stock-based compensation but did not include the RealNetworks settlement, called for first-quarter earnings of 30 cents a share. When adding back the RealNetworks charge, Microsoft beat the consensus estimate by a penny. The company's guidance called for earnings of 29 cents to 31 cents a share.

First-quarter revenue rose 6% to $9.74 billion from $9.19 billion a year earlier. That was slightly shy of the consensus estimate of $9.78 billion for the first quarter but within the company's targeted range of $9.7 billion to $9.8 billion.

Looking forward, Microsoft said it expects to earn 32 cents to 33 cents a share, including stock compensation, on revenue of $11.9 billion to $12 billion in the second quarter of fiscal 2006, which began Oct. 1. That's short of analyst estimates calling for second-quarter earnings of 35 cents a share including stock charges on $12.29 billion in revenue.

The fiscal second quarter includes the crucial holiday sales season and will feature a couple of major product launches, including the latest version of its SQL Server database and next-generation Xbox 360 video-game console. While Xbox 360 will drive revenue growth, it will be a drag on earnings because Microsoft initially will lose money on every console sold.

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