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Xbox 360 boosts Microsoft profits

But Vista delays damage full-year earnings

A strong quarter from its entertainment and software server divisions helped Microsoft beat Wall Street analyst expectations for the first quarter of fiscal 2007, which ended 30 September.

Microsoft reported revenue of $10.81bn, a year-over-year increase of 11 percent and slightly higher than the $10.75bn analysts polled by Thomson Financial were expecting.

Entertainment and Devices Division revenue grew 70 percent over the prior year, driven mainly by demand for Xbox 360 consoles, software and peripherals, and the Xbox Live service. To date, 6 million Xbox 360 consoles have been sold worldwide, while Xbox Live passed the 4 million-member mark during the quarter, Microsoft said.

Server & Tools revenue increased 17 percent over the comparable quarter in the prior year, with SQL Server 2005, Windows Server, Visual Studio 2005 and BizTalk Server performing especially well.

However, even as Microsoft reported a strong quarter, the company lowered its full-year guidance for earnings per share. Some speculated the change could be related to Windows Vista being later than originally expected, it’s now due to be generally available in January 2007.


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