Beating Wall Street's forecasts, Microsoft reported strong quarterly sales and profits on Thursday. Year-over-year, the software giant saw revenue rise 13% in the third quarter to $16.43 billion.
Revenue from Microsoft's online services division grew 14% year-over-year, which the company attributed primarily to increases in search revenue. Bing's U.S. search share increased to 13.9% this quarter.
"We delivered strong financial results despite a mixed PC environment, which demonstrates the strength and breadth of our businesses," Peter Klein, CFO at Microsoft, said Thursday. "Consumers are purchasing Office 2010, Xbox and Kinect at tremendous rates, and businesses of all sizes are purchasing Microsoft platforms and applications."
The Entertainment & Devices division grew 60% year-over-year -- fueled by Kinect for Xbox 360, the fastest-selling consumer electronics device in history, continued strong Xbox 360 console sales and growth of Xbox Live.
Overall, operating income, net income and diluted earnings per share for the quarter were $5.71 billion, $5.23 billion, and $0.61 per share, which represented increases of 10%, 31% and 36%, respectively, when compared with the prior-year period.
Diluted earnings per share included a $0.05 tax benefit primarily related to an agreement with the U.S. Internal Revenue Service to settle a portion of their audit of tax years 2004 to 2006.
Microsoft Business Division revenue grew 21% year-over-year. Since its release last spring, Office 2010 has become the fastest-selling version of Office in history, according to the company, while the integrated innovation with SharePoint, Exchange, Lync and Dynamics CRM is driving significant growth for the division.
Server & Tools revenue grew 11% year-over-year -- the fourth consecutive quarter of double-digit growth, according to Microsoft.
Meanwhile, while Microsoft heralds Windows 7 as the fastest-selling operating system in history, revenue for the segment was down 4% in the third quarter. Looking ahead, Microsoft reaffirmed operating expense guidance of $26.9 billion to $27.3 billion for the full year ending June 30, 2011.