SEATTLE (REUTERS) - Microsoft Corp cruised past Wall Street's quarterly profit and revenue forecasts on Thursday, helped by strong sales of its Office and server software to businesses, sending its shares up 6 per cent after hours.
The world's largest software company is the latest tech firm to surprise investors with a powerful performance, coming the same day as Amazon.com Inc eased past average revenue forecasts.
Technology is proving one of the most resilient sectors in an uncertain economy, with 84 per cent of tech companies beating analysts' earnings estimates for the latest quarter.
Analysts had trimmed profit estimates for Microsoft over the past three months, concerned by the launch of an ambitious reorganisation by retiring chief executive Steve Ballmer and the pricey acquisition of Nokia's handset business, even as the company's core personal computer market ebbs away.
"The earnings report will positively surprise the market, especially in the context of the soft expectations going in and the dismal report last quarter," said Mr Todd Lowenstein, a portfolio manager at fund firm HighMark Capital. "Beating on revenue and earnings handily will boost confidence that the reorganisation is pivoting them in the right direction."
As part of its reinvention as a 'devices and services' company, Microsoft now reports under two main groups, one covering its devices and consumer business, and one its commercial business.
The commercial side was the strongest in the quarter, posting a 10 per cent increase in revenue, chiefly from selling Office and server software to businesses. The consumer and hardware group's revenue rose a more modest 4 per cent, held back by another poor quarter for the Windows system as sales of personal computers continue to decline.
For the fiscal first quarter, Microsoft posted a 17 per cent increase in profit to US$5.2 billion (S$6.44 billion), or 62 US cents per share, up from US$4.5 billion, or 53 US cents per share, in the year-ago quarter.
That topped Wall Street's average forecast of 54 US cents, according to Thomson Reuters I/B/E/S, although analysts had been edging down estimates for the last three months.
Revenue rose 16 per cent to US$18.5 billion, helped by rising sales of its Office software. Analysts had expected US$17.8 billion, on average.
Its shares rose to US$35.65 after hours, after closing at US$33.72 on Nasdaq.