Microsoft beats forecasts with 23% profit gain

Microsoft said its fiscal first-quarter profit rose 23 percent compared with last year, bolstered by brisk sales of the new "Halo 3" video game, Windows and Office.

The better-than-expected results pushed it stock up sharply in after-hours trading.

For the quarter ended Sept. 30, the software maker's profit climbed to $4.29 billion, or 45 cents a share, from $3.48 billion, or 35 cents a share, during the same period last year.

The results topped Wall Street's expectations. Analysts, on average, had forecast a profit of 39 cents a share, according to a Thomson Financial poll.

Revenue grew 27 percent to $13.76 billion from $10.81 billion in the year-ago quarter. Analysts were looking for $12.57 billion in sales.

The business unit responsible for the Windows Vista operating system contributed $4.14 billion in revenue, while the unit that makes the Office 2007 software suite brought in $4.11 billion.

Sales of the "Halo 3" video game and the Xbox 360 console that Halo is played on pushed the company's entertainment and devices division to a profit of $165 million in the quarter.

The division responsible for online advertising posted a loss of $264 million.

Microsoft increased its guidance for the fiscal year, saying it expected to earn $1.78 to $1.81 a share on revenue of $58.8 billion to $59.7 billion. Earlier, the company predicted it would earn $1.69 to $1.73 a share on $56.8 billion to $57.8 billion in sales.

Shares of Microsoft gained 74 cents, or 2.4 percent, on Thursday before the earnings announcement to close at $31.99. In early after-hours trading, the stock was up $2.86, or 8.9 percent, to $34.85