• Los Angeles Times, Friday, October 26, 2007 11:03 AM

By all accounts, Microsoft blew its third-quarter earnings out of the water on Wednesday, soaring well-above analysts' expectations, sending the software giant's share price to $35.52, its highest mark since Internet bubble burst. "In 24 hours, they added $38 billion in market capitalization," Sanford C. Bernstein analyst Charles Di Bona told the L.A. Times. "That's a pretty good day's work." Overall, the company reported a 23 percent profit surge to $4.3 billion from $3.5 billion in 2006.
Much of the good news came from Microsoft's entertainment division, which handles its Xbox 360 video game console. The release of the highly anticipated shooter "Halo 3" had an astounding effect on Xbox hardware and software sales, sending the division into the black for the first time with a $165 million profit. Even so, Microsoft still has a long way to go to recoup the more than $6 billion it's sunk into its gaming division.

The biggest revenue driver came from sales of its Windows and Office software, worth $3.2 and $2.7 billion, respectively. Online services, meanwhile, continues to be a black hole that grows ever wider: the division's quarterly loss more than doubled to $264 million.

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