NEW YORK ( TheStreet) -- Microsoft ( MSFT) posted better-than-expected second-quarter earnings Thursday, but faced somewhat of a stock selloff due most to its Windows 7 sales miss. The software giant's numbers, which were leaked during trading, saw the company post an adjusted profit of 77 cents per share on sales of $19.95 billion, up from 74 cents EPS on sales of $19 billion in the year-ago quarter. Analysts were expecting EPS of 68 cents and revenue of $19.14 billion.
The nice sales boost came mostly from Microsoft's entertainment division, which saw 55% growth over the quarter thanks to holiday sales of the Kinect for Xbox 360, Xbox Live subscriptions and Xbox games. Shares of Microsoft, which has undergone something of a brain drain in recent months, closed down $1.11, or 3.84%, at $27.76 on Friday. Verizon & AT&T Telecom rivals Verizon ( VZ) and AT&T ( T) were both on deck this week, with investors closely monitoring the potential impact of the new Verizon iPhone. Apple's ( AAPL) new buddy Verizon was up first, reporting its fourth-quarter results on Tuesday before market open. The telco raised its growth targets for profits and sales driven largely by wireless and the iPhone. The telco said sales growth will more than double in 2011. Addressing analysts and investors at a special earnings presentation, Verizon executives said revenue will grow in the range of 4% to 8% this year, driven by an estimated 11 million Apple iPhone sales. Shares of Verizon, which spent $1.4 billion to acquire data center specialist Terremark Worldwide ( TMRK) on Thursday, ended the week down 86 cents, or 2.36%, at $35.63. AT&T met Wall Street's targets with its fourth-quarter results on Thursday, but guided below analysts' estimates for 2011. The telco also showed the beginnings of what is expected to be a slowdown in wireless subscriber growth as Verizon starts selling the iPhone next month. AT&T said it added 400,000 post-paid mobile phone subscribers in the fourth quarter, down from 745,000 post-paid customers added in the third quarter. CEO Randall Stephenson, however, predicted that the smartphone market will continue to be strong for AT&T with the introduction of new smartphones based on Google's ( GOOG) Android operating system and other devices. AT&T's stock closed down 64 cents, or 2.28%, at $27.49 on Friday.