Microsoft stays on track as revenue and profit rise

Technology bellwether shows strong growth and predicts steady next quarter

Microsoft has weathered the credit crunch to post strong Q1 financials

Microsoft reassured investors today after posting a two per cent rise in first-quarter profits to $4.37bn (£2.81bn), up from $4.29bn (£2.75bn) in the same period last year.

Quarterly revenue increased nine per cent from $13.7bn (£8.8bn) last year to $15bn (£9.6bn) on the back of growth in software maintenance contracts, a nine per cent jump.

"In a challenging economic environment, the first-quarter results exhibit the strength and diversity of our business model," said Chris Liddell, chief financial officer at Microsoft.

During the quarter, Microsoft dropped its bid to acquire Yahoo while vigorously pursuing Google in the search and advertising market.

Losses in search nearly doubled to $480m (£308m) due to heavy investment, but sales grew 15 per cent as the company continued its pursuit of market share.

Microsoft said that it expected profits to be in the range of $6.1bn (£3.9bn) to $6.4bn (£4.1bn) for the coming quarter.

Shares rose slightly in after-hours trading, after adding 79 cents in regular trading, to end at $22.32 (£14.30).