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Microsoft on Thursday announced a first quarter profit increase of 28 per cent, but reported disappointing sales to the corporate sector.

For the company's fiscal first quarter ending on 30 September, Microsoft reported a net profit of $2.6 billion, or $0.24 per share, compared with a profit of $2 billion, or $0.19 per share, a year earlier, a figure that was adjusted to reflect stock options that were granted at the time. The new first quarter results, and last year's numbers, reflected a $0.06 per share charge for stock-based compensation, as well as income of $763 million for certain investments.

Overall revenues were $8.22 billion. This compares to $7.75 billion in the corresponding quarter of last year. Revenues were also up from $8.07 billion in the previous quarter. Operating income for the first quarter was $3.15 billion, compared to $3.03 billion last year.

Though the per share income figures beat the average Wall Street forecast by about a penny, many analysts noted that Microsoft's forecast for the upcoming quarter was not especially bullish. Microsoft said that it expected revenue to be in the range of $9.7 billion and $9.8 billion in the next quarter. Operating income is expected to be in the range of $3.2 billion and $3.3 billion, including equity compensation expense of approximately $1 billion.

Analysts also commented on the fall in corporate contracts, blaming the trend on security concerns about Microsoft products, following a string of high profile attacks such as the Blaster worm.

The sluggishness in the corporate arena was compensated for by a strong performance in the consumer sector. "While corporate IT spending was slow to improve this quarter, we saw strength across all of our consumer businesses, driving higher than expected revenue for the company," said John Connors, chief financial officer at Microsoft.

Connors also upped the company's forecast for PC sales this year, which in turn forced it to raise its expectations for sales of its desktop and laptop Windows operating system. Microsoft now expects personal computer unit sales for its current fiscal year to post upper single-digit per centage growth instead of its previous outlook for mid-single digit growth, Connors said.

Other notable figures in the company's results were a 50 per cent jump in ad sales for the on-line unit MSN, which allowed the business to post its first ever operating profit.

© ENN

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