Updated from 4:34 p.m. EST to provide comments from the conference call in the fifth and sixth paragraphs.REDMOND, Wash. (TheStreet) --Microsoft (MSFT) - Get Report shares rose in extended trading following stronger-than-expected earnings.

The Redmond, Wash.-based software giant reported

third-quarter earnings

of 60 cents per share on $17.41 billion in revenue. Analysts polled by

Thomson Reuters

had expected 57 cents per share on $17.16 billion in revenue.

CEO Steve Ballmer was positive on the quarter, especially the release of Windows 8, which will be a

major driver of revenue.

"With the upcoming release of new Windows 8 PCs and tablets, the next version of Office, and a wide array of products and services for the enterprise and consumers, we will be delivering exceptional value to all our customers in the year ahead," Ballmer said in a press release.

Revenue for Windows and Windows Live came in at $4.62 billion during the quarter, up 4% year-over-year. Microsoft Business posted $5.81 billion in revenue, a gain of 9%. Server & Tools recorded $4.57 billion, up 14%, Online Services $707 million, up 6%, and Entertainment & Devices, $1.62 billion, down 16%.

On the conference call, Microsoft said the strength in Windows was helped in large part by business PC upgrades, as IT departments across the globe continued to upgrade hardware. There was broad based growth geographically, although there was noted strength in Europe.

Although Entertainment & Devices revenue fell 16% year-over-year, the company said it "feels really good about our positioning and strategy in not just gaming, but UI with Kinect and Xbox Live." Xbox 360 has been the number one console for the past 15 months, and Xbox continues to see more demand as an entertainment hub, not just gaming.

Microsoft said it expects to have lower operating expenses in fiscal 2012 and 2013. It now expects to have $28.3 billion to $28.7 billion in operating expenses for 2012 and $30.3 billion to $30.9 billion in expenses for 2013.

The company ended the quarter with $59.5 billion in cash, up from $52.7 billion a year ago.

Shares ended the regular session lower, off 0.4% to $31.01. Microsoft is moving higher in after-hours trading, up 2.87% to $31.90, according to


Interested in more on Microsoft? See TheStreet Ratings' report card for

this stock


Check out our new tech blog,

Tech Trends

. Follow TheStreet Tech

on your wireless devices



Written by Chris Ciaccia in New York

>To follow the writer on Twitter, go to



>To submit a news tip, send an email to: