Sales of Vista have been stronger than expected, leading to Q1 profit of nearly $5 billion.

Microsoft in huge profit shock

It seems we may have to delay Google’s coronation as the new big daddy of the tech world a bit longer as Microsoft has confounded its many doubters and posted record Q1 profits.

It has announced revenue of $14.40 billion for the quarter ended March 31, 2007, a 32% increase over the same period of the prior year. This revenue drove record profits with operating income of $6.59 billion and net income of $4.93 billion.

“I am extremely pleased that we delivered a quarter of strong double-digit growth for revenue, operating income and EPS,” said Chris Liddell, chief financial officer at Microsoft. “And I am looking forward to a very good finish to this fiscal year with strength continuing into fiscal 2008.”

“This quarter marked the consumer launches of Windows Vista and the 2007 Microsoft Office system, and we are delighted with the positive customer response these products have received,” said Kevin Turner, chief operating officer at Microsoft.

Strong sales of Windows Vista have lead to Microsoft posting record profits for its third financial quarter ending March 31st, but the firm’s Entertainment and Devices division, the home of its Xbox and PC operations, reported continuing losses.

Overall revenue for the quarter ending March 31st was $14.4 billion, up 32 per cent from the same period the year before. Operating income hit $6.59 billion and net income reached $4.93 billion. The popularity of Windows Vista and Microsoft Office were credited as the main driving factors.

However, revenue for the Entertainment and Devices divisions, the home of its Xbox and PC gaming operations dropped by over 20 per cent to $929 million. And while operating loss improved by 22 per cent, it still reached a hefty $315 million.

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