Microsoft reports buoyant results

Demand for Windows has boosted Microsoft's financial performance

Microsoft exceeded market expectations with better than expected results that boosted its shares to the highest level since June 2008.

The software giant reported a profit drop of 18 per cent for its fiscal first quarter to $3.57bn (£2.18bn, or 24p a share), compared with $4.37bn (£2.67bn) reported in the same period a year ago – however, analysts had predicted profit of 19p a share.

The company saw a decrease in sales of 14 per cent to $12.92bn (£7.9bn), again surpassing average predictions of $12.31bn (£7.53bn). The figure was partly reduced by deferred revenue of $1.47bn (£899m) related to the free upgrade to Windows 7 for users that have recently purchased its operating system Vista.

As a result, Microsoft’s shares in Wall Street climbed nine per cent – to their highest since summer last year.

"We are very pleased with our performance this quarter and particularly with the strong consumer demand for Windows," said Chris Liddell, chief financial officer at Microsoft.

"We also maintained our cost discipline, which allowed us to drive strong earnings performance despite continued tough overall economic conditions."