Demand for Windows 7, Xbox lifts Microsoft earnings; more losses online

Microsoft said on Friday that strong demand for the just-released Windows 7 operating system and its popular Xbox gaming console lifted the company's financial results this quarter, beating expectations.

Microsoft said on Friday (techmeme) that strong demand for the just-released Windows 7 operating system and its popular Xbox gaming console lifted the company's financial results this quarter, beating expectations.

The tech giant said it earned $3.57 billion, or 40 cents per share, on revenue of $12.92 billion for its fiscal first quarter that ended September 30.

Microsoft deferred $1.47 billion in revenue ahead of the launch of Windows 7. With the addition of that, revenue would have been $14.39 billion, with earnings of 52 cents per share.

"We are very pleased with our performance this quarter and particularly by the strong consumer demand for Windows," CFO Chris Liddell said in a statement. "We also maintained our cost discipline, which allowed us to drive strong earnings performance despite continued tough overall economic conditions."

The earnings report comes just one day after Microsoft launched its highly-anticipated Windows 7 operating system. The strong results follow a July quarter with weaker-than-expected results.

Microsoft says it is continuing to cut costs, and expects operating expenses of $26.2 billion in the current fiscal year, which runs through the end of June. That's a drop of $300 million from its previous forecast.

Despite the expected success of Windows 7, all is not well at Microsoft. The company continued to post significant losses in its online business, which includes the Bing search engine and MSN: operating loss grew to $480 million, from $321 million one year ago.

Revenue for online business dropped to $490 million from $520 million a year ago.

Here's a look at Microsoft's results. Please note that the Windows figures were affected by the Microsoft's deferment of revenue ahead of the Windows 7 launch:

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