Microsoft Posts Record Revenue

Microsoft beats the Street with record third-quarter revenue.
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(Microsoft story updated with additional earnings details and after-hours stock-price movement.)
NEW YORK (TheStreet) -- Microsoft (MSFT) - Get Report has posted record third-quarter revenue that beat the consensus estimate, as business customers begin "to refresh their desktops and the momentum of Windows 7 continues to be strong," the company said.

Microsoft is offering operating expense guidance of $26.1 billion to $26.3 billion for the full year ending June 30, 2010.

Microsoft announced record third-quarter revenue of $14.50 billion for the quarter ended Mar. 31, 2010, a 6% increase from the same period of the prior year.

Operating income, net income and diluted earnings per share for the quarter were $5.17 billion, $4.01 billion and 45 cents a share, which represented increases of 17%, 35% and 36%, respectively.

The results include the deferral of $305 million of revenue relating to the Microsoft Office 2010 Technology Guarantee program. Adjusting for the revenue deferral, third-quarter revenue totaled $14.81 billion, an increase of 8% over the prior year period.

Analysts surveyed by Thomson Reuters were expecting earnings of 42 cents a share on revenue of $14.38 billion.

"Windows 7 continues to be a growth engine, but we also saw strong growth in other areas like Bing search, Xbox LIVE and our emerging cloud services," Peter Klein, chief financial officer at Microsoft said.

Despite the record quarter, Microsoft stock has fallen 3.4% to $30.34 in after-hours trading, as investors take profits and remain concerned about Windows ability to keep up with the increasing clout and prevalence of cloud computing. Microsoft stock has been underperforming compared to the S&P as a whole.

-- Reported by Andrea Tse in New York

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