Increased demand for Windows 2000 helped Microsoft raise second quarter revenues by 7.7 per cent to $6.59 billion from $6.11 billion a year earlier. Net profit was $2.62 billion for the period.

Last month, MS reduced its targets for the quarter and the year. It met these reduced expectations for the quarter and expects to meet them for the full year as well.

In a statement Connors said: "While we are enthusiastic about the breakthrough products and services the company will be delivering in 2001, we remain guarded about the near-term economic outlook and its impact on PC demand and technology spending."

Connors said MS thinks worldwide PC growth for fiscal 2001 would be in the low double digits, "the very low end of double digits".

Sales of desktop applications declined 2 per cent year over year to $2.49 billion from $2.53 billion.

Server operating sales rose 21 per cent to $1.24 billion compared to a year earlier. There was also a 26 per cent increase in Exchange Server and SQL Server client licenses from a year earlier. ®